Striving for Equilibrium: A Critical Analysis of Section 54 of The Australian Insurance Contracts Act
Abstract
Section 54 of the Insurance Contracts Act 1984 (Cth) is a unique provision that concerns the interests of the insurer, the insured and other third parties where there
has been a breach of, or non-compliance with, the terms of an insurance contract. This article investigates the mechanics of what is arguably the Act’s most complicated and controversial section. It examines the mischief that the section was designed to remedy and provides an insight into the treatment of the interests of the insurer, insured and ‘other parties’ where there has been a breach of or non-compliance with a term of an insurance policy. The article looks at the strengths and
weaknesses of the section, especially regarding the issues of ‘claims’ policies and the notion of prejudice. The paper concludes by making suggestions for improving
the overall operation of section 54 in balancing the competing interests of the insurer and the insured.
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