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The FOS Approach to Section 54 of the Insurance Contracts Act 1984

Section 54 has been described by legal commentators as a broad remedial provision. It applies to contracts which permit an insurer to refuse to pay a claim because of some act or omission of the applicant or another person after the contract was entered into.

When considering a dispute and the application of section 54, FOS determines the dispute on the basis of:

  • what is fair in all the circumstances,
  • with regard to the relevant legal principles, and
  • the terms of the policy and good industry practice (including relevant industry codes and prior FOS decisions).

This approach will be useful to:

  1. FSPs, consumers and consumer representatives who have an insurance dispute at FOS involving technical policy exclusions.
  2. Lawyers and other professionals who are assisting the insurance claims process.
  3. Anyone who wants to understand how FOS applies legal principles, industry codes and good industry practice when considering insurance disputes involving section 54.