---
title: "Test a refusal of an NSW income-protection or life policy against section 54"
url: "https://ailawframework.com/practice/insurance-law/assess-whether-section-54-stops-an-insurer-refusing-a-claim/new-south-wales"
type: "task_jurisdiction_version"
site: "AI Law Framework"
id: "A22-O20261018-1-NSW"
practice_area: "Insurance Law"
tier: "red"
lawyer_review: "required"
jurisdictions: ["NSW"]
last_reviewed: "2026-10-25"
---

# Test a refusal of an NSW income-protection or life policy against section 54

> From the policy, the refusal and the act or omission the insurer relies on, set out whether that act was after the contract and which subsection of section 54 the file raises.…

Canonical page: https://ailawframework.com/practice/insurance-law/assess-whether-section-54-stops-an-insurer-refusing-a-claim/new-south-wales  
Last reviewed: 2026-10-25

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

| Fact | Value |
| --- | --- |
| Practice area | [Insurance Law](https://ailawframework.com/practice/insurance-law.md) |
| Human involvement | Red: Lawyer writes; AI may check, clarify or collect data |
| How AI is used | From the policy, the refusal and the act or omission the insurer relies on, set out whether that act was after the contract and which subsection of section 54 the file raises. Do not apply section 54 to a contract the lawyer marks under section 9, and do not say whether the insurer may refuse. |
| What the lawyer must review | Decide whether the refusal rests on an act or omission after the contract. Apply the prejudice reduction, the causation refusal, and the safety exception only as section 54 states them. Do not use section 54 on a workers compensation or motor-accident contract marked under section 9. Keep medical details in the firm's system. Apply ASCR rule 9, APP 11, and the Privacy Act notifiable-breach test. |
| Written for | New South Wales |
| Applies to | [Assess whether section 54 stops an insurer refusing a claim](https://ailawframework.com/practice/insurance-law/assess-whether-section-54-stops-an-insurer-refusing-a-claim.md) |

## Checking plan

**Verify against sources**

The lawyer decides whether section 54 limits a refusal of a life or income-protection claim, and whether section 9 has already taken the contract outside the Act.

- What the AI does: From the policy, the refusal and the act or omission the insurer relies on, set out whether that act was after the contract and which subsection of section 54 the file raises. Do not apply section 54 to a contract the lawyer marks under section 9, and do not say whether the insurer may refuse.
- What the lawyer does: Decide whether section 54 applies and whether the insurer may refuse or must reduce for prejudice.
- Who reviews: Lawyer competent in this practice area
- Basis: Checked against the linked sources on 23 October 2026. Confirm the current instrument before reliance.

## Checks the lawyer makes

1. Section 54(1) concerns an act after the contract, other than an act to which subsection (2) applies. The insurer may not refuse by reason only of that act, but liability is reduced by the prejudice to the insurer.
2. Subsection (2) allows a refusal where the act could reasonably be regarded as capable of causing or contributing to a loss. Subsections (3) and (4) limit that refusal if the insured proves the loss, or part of it, was not caused by the act.
3. Subsection (5) prevents a refusal by reason only of an act necessary to protect a person or property, or an act that it was not reasonably possible to avoid. Subsection (6) includes an omission.
4. If the lawyer marks the contract under section 9(1)(e) or (f), or as State insurance under section 9(2), do not apply section 54.

## Notes

- This version is for a life, total and permanent disablement or income-protection contract that is not a New South Wales workers compensation or motor-accident scheme contract. No remedy figure was opened.

## Practical guide

Jurisdiction: Insurance Contracts Act 1984 (Cth) sections 9 and 54, for a life or income-protection policy outside a New South Wales statutory scheme

**Deliverable**: A section 54 element table. No conclusion on the refusal.

**Inputs**

- Policy and the refusal
- The act or omission the insurer relies on
- Dates of the contract and of the act
- The lawyer's mark on whether section 9 applies

**Example**: Illustrative example: An income-protection insurer refuses a claim because a form was late. The tool sets out section 54(1) and (2) and leaves causation and prejudice blank. It does not do this exercise for a workers compensation policy the lawyer has marked under section 9.

**Stop and escalate when**

- The lawyer has not said whether section 9 takes the contract outside the Act.
- The date of the act relative to the contract is not on the file.

Checked 2026-10-23.

## Sources

- [Insurance Contracts Act 1984 (Cth) section 54](https://classic.austlii.edu.au/au/legis/cth/consol_act/ica1984220/s54.html) (checked 2026-10-23)
- [Insurance Contracts Act 1984 (Cth) section 9](https://classic.austlii.edu.au/au/legis/cth/consol_act/ica1984220/s9.html) (checked 2026-10-23)

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*