Commonwealth Consolidated Acts

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INSURANCE CONTRACTS ACT 1984 - SECT 13

The duty of the utmost good faith

  (1)   A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith.

  (2)   A failure by a party to a contract of insurance to comply with the provision implied in the contract by subsection   (1) is a breach of the requirements of this Act.

  (2A)   An insurer under a contract of insurance contravenes this subsection if the insurer fails to comply with the provision implied in the contract by subsection   (1).

Civil penalty:   5,000 penalty units.

  (3)   A reference in this section to a party to a contract of insurance includes a reference to a third party beneficiary under the contract.

  (4)   This section applies in relation to a third party beneficiary under a contract of insurance only after the contract is entered into.



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