Since 2021, some of the fine print in an Australian insurance policy isn't just unfortunate — it can be legally challengeable.
Insurance is now covered by unfair contract terms law
Before 5 April 2021, general and life insurance contracts were specifically carved out from Australia's unfair contract terms protections — an exemption written into Section 15 of the Insurance Contracts Act 1984 (Cth) that most other consumer contracts didn't get. An amendment to that section closed the gap: insurance contracts that are new, renewed, or varied from that date are now covered by the unfair contract terms regime under the Australian Securities and Investments Commission Act 2001 (Cth). Health insurance, compulsory third-party (CTP) motor insurance, and workers' compensation policies are specifically excluded and remain outside this regime.
What makes a term "unfair"
Under Sections 12BF and 12BG of the ASIC Act, a term is unfair if it causes a significant imbalance in the rights and obligations between insurer and policyholder, isn't reasonably necessary to protect the insurer's legitimate interests, and would cause harm — financial or otherwise — if relied on. Terms that simply define the main subject matter of what's being insured are excluded from this test: the law targets buried or one-sided conditions, not the basic scope of coverage itself.
A real case: ASIC v HCF Life Insurance
In 2023, ASIC took HCF Life Insurance to the Federal Court over a "pre-existing condition" exclusion used across its Recover insurance products, arguing it was both misleading and an unfair contract term — worded broadly enough to potentially deny claims for conditions a policyholder wasn't aware of and couldn't reasonably have known about when they took out the policy. In October 2024, the Federal Court agreed the term was liable to mislead the public — HCF Life was ordered to pay a $750,000 penalty in 2025 — but it dismissed the separate claim that the term was legally "unfair," a finding the Full Federal Court upheld on ASIC's appeal in 2026. The case is still worth knowing: a term can survive the "unfair" test and still be illegal for a different reason, which is exactly why an exclusion worth worrying about deserves checking on its own terms, not just against a single legal label.
If you think a term in your policy is unfair
Raise it directly with your insurer first, in writing, and reference the specific term you think crosses the line. If it's not resolved, you can escalate to the Australian Financial Complaints Authority (AFCA), which handles insurance disputes free of charge for consumers.
Sources
- ASIC — Full Federal Court dismisses ASIC appeal on HCF Life unfair contract term finding (2026)
- Insurance Contracts Act 1984 (Cth), Section 15
- Australian Securities and Investments Commission Act 2001 (Cth), Sections 12BF–12BG
- Australian Financial Complaints Authority
Related Kibbo Tools
- Insurance Policy Coverage Checklist — a structured way to check exclusions, conditions and limits.
- Insurance Policy & Coverage Comparison Workbook — compare fine print across multiple policies side by side.