ASIC v Hollard: When Insurance Claim Delays Become a Breach of Utmost Good Faith

01 An accepted claim did not prevent the loss of the home

The claim concerned a home in regional Victoria, not a Sydney mansion. The accompanying AI-generated image is illustrative and does not depict the insured property.

According to ASIC's filed concise statement, a storm on 29 October 2021 damaged the roof and fencing, allowing rain into the house. The insured couple notified the claim on 31 October 2021. Hollard, formerly Commonwealth Insurance Limited (CommInsure), initially accepted the storm claim.

But acceptance did not translate into a sufficiently prompt response. An engineering assessment identified as necessary in November 2021 did not take place until August 2022. The initial make-safe measures failed to stop water entering the property, and the house continued to deteriorate.

ASIC's account describes delayed emergency works and mould remediation, together with a family left in worsening conditions. Its pleading records that temporary accommodation was not arranged until 31 March 2023 and that Hollard formally communicated its decision declining roof replacement on 28 April 2023. That was a refusal of a particular component of the claim, not a rejection of all storm damage.

Published accounts of the admitted conduct identify seven combined failures:

• Engineering assessment. Delay in obtaining the structural assessment needed to progress the claim.
• Emergency works. Delay in arranging further protection after learning that the first make-safe works had failed.
• Temporary accommodation. Delay in providing accommodation while the property's condition deteriorated.
• Relevant reports. Insufficient consideration of two written expert reports and a claims-manager inspection report relevant to the proposed roof settlement.
• Settlement explanations. Failure to explain sufficiently clearly in writing the reasoning and calculation behind the proposed cash settlement for roof damage.
• Mould remediation. Delay despite reports of mould growth.
• Fencing assessment. An incorrect assessment of the extent of boundary fencing requiring repair, followed by delay in correcting it.

The published case analyses describe a single admitted contravention arising from the combined conduct over approximately 18 months. They do not describe seven separately penalised contraventions. ASIC subsequently confirmed the $1.55 million payment outcome, without providing an itemised breakdown or exact final-payment date in its announcement.

02 What utmost good faith actually requires

For contracts governed by the Insurance Contracts Act 1984 (Cth), s 13(1) implies an obligation requiring each party to act towards the other with utmost good faith in matters arising under or in relation to the contract. The duty is reciprocal. Section 13(2A) separately makes an insurer's failure to comply a civil penalty contravention.

The duty is not confined to avoiding dishonesty. In CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36, the High Court considered the importance of due regard to legitimate interests and commercial standards of decency and fairness.

That does not require the insurer always to subordinate its own interests, accept the policyholder's interpretation or pay an uninsured loss. An insurer can investigate causation, obtain expert evidence, apply exclusions and reject a claim where the policy and evidence justify doing so.

The question is how it exercises those rights. A genuine coverage dispute is not a permission to leave a claim unattended or disregard relevant evidence. Conversely, utmost good faith is not a substitute for establishing an entitlement under the policy.

ASIC described Hollard's penalty as the first civil penalty ordered against an insurer for breaching the duty of utmost good faith. That is a narrower proposition than saying this was the first case in which an insurer's conduct breached the duty.

Coverage and claims handling are different questions. A legitimate dispute about one does not remove the obligations attaching to the other.

03 When delay stops being an administrative inconvenience

Technical investigations take time. Major weather events, competing engineering opinions and complex repair scopes can all affect a reasonable assessment period. Elapsed time alone does not establish a breach, and neither does every missed deadline or unanswered email.

But context matters. Is water still entering? Is mould spreading? Has a safety concern been identified? Does the insurer know that the business is losing revenue or that the insured needs accommodation?

ASIC quoted Justice Button's criticism of the delay in appointing an engineer and the “glacial progress of the claim handling while the Insureds' house decayed around them”. The quoted passage rejected staff busyness or poor communication with suppliers as a sufficient explanation for that course of events.

For a policyholder, repeated follow-ups may not adequately record the real problem. State what is deteriorating, when the insurer was informed, what action is requested and why the matter is urgent. Support that account with dated photographs, reports and costs.

Additional damage, accommodation expense or business interruption does not automatically become recoverable merely because the insurer delayed. Recovery requires an available legal basis and proof of causation and recoverable loss. A clear chronology helps distinguish the original insured damage from any later loss said to result from claims handling.

04 Expert evidence must address the real coverage question

Property claims often turn on competing explanations: storm damage, pre-existing defects, defective design, workmanship, wear and tear or gradual deterioration. The policy may treat each differently.

In the Hollard matter, the roof dispute involved concerns about undersized trusses. The reported failures included insufficient consideration of material reports in assessing the proposed roof settlement.

The lesson is not that an insurer must accept the insured's expert, or that disagreeing with an expert is itself unlawful. It is that material evidence should be considered appropriately and the position should be capable of explanation.

An effective challenge identifies:

• the specific damage for which indemnity is sought;
• the insuring clause, exclusions and any exceptions to those exclusions;
• the expert findings on cause, extent and necessary repair;
• the assumptions on which the insurer relies; and
• why the insurer says competing evidence does not change the outcome.

An insured event's contribution to damage does not, without more, establish cover. Concurrent causes, exclusions and resulting-damage provisions must be assessed against the actual wording and applicable law. The objective is to identify and test the point of disagreement, not simply to collect more reports.

05 Protecting the property while the dispute continues

A coverage disagreement does not stop water, mould or decay. The immediate practical question may be what needs to happen now, rather than who will ultimately pay.

Check the policy's mitigation conditions, emergency-expense provisions, approval requirements and repair arrangements. Whether the insurer should arrange, authorise or fund protective work depends on the wording, any undertakings or control it has assumed, the known risks and the circumstances.

The duty of utmost good faith does not automatically require reimbursement of every protective expense. Equally, an insurer's silence is not assurance that doing nothing is safe.

Where practicable, seek written approval and give the insurer a reasonable opportunity to respond. Record why immediate action is necessary, preserve photographs and invoices, and retain evidence relevant to causation before work changes the site. Safety should not be compromised while correspondence continues; obtain appropriate professional advice about hazardous conditions or remediation.

Address interim benefits separately

Temporary accommodation, alternative business premises, storage, replacement equipment and additional operating expenses may be subject to separate benefits, sublimits, conditions and time limits. Business interruption cover may require insured damage and proof of interruption within the applicable indemnity period.

Identify the benefit being claimed and ask what information is needed to assess it. Do not assume every interim cost is covered, or that a dispute over one repair item necessarily defeats every other benefit. Both questions depend on the contract and facts.

06 A settlement offer needs a comprehensible calculation

A cash settlement can be sensible. It can also shift cost and completion risk to the insured. Before accepting, establish what the offer resolves and what remains in dispute.

• Scope. Which damage and associated works are included?
• Method. What repair approach, quantities and rates were used?
• Deductions. What excess, depreciation, limits or other adjustments apply, and why?
• Excluded items. Which parts of the claim have been left out?
• Release. Does acceptance settle other losses or waive further rights?

An offer is not necessarily inadequate because it is below the insured's estimate. Nor should “final offer” replace a reasoned explanation. Ask for the scope, assessment and calculation in writing.

Separate Cash Settlement Fact Sheet requirements may apply under the Corporations Act 2001 where a cash settlement is offered to a retail client under a general insurance product and the contract gives a choice of settlement methods. The requirements are not universal; statutory triggers and applicable relief must be checked. Whether or not a fact sheet is required, the insured needs enough information to make an informed settlement decision.

07 What to do when the claim is not progressing

Hollard was a regulatory case brought by ASIC. A policyholder facing delay needs a separate assessment of its own rights and remedies.

1. Build the chronology. Record notification, inspections, information requests, reports, decisions and periods of inactivity. Identify what the insurer knew at each stage.
2. Preserve the loss evidence. Keep dated photographs, expert reports, estimates, invoices and relevant business records. Separate original damage from subsequent deterioration and expense.
3. Request a defined response. Identify the outstanding decision or protective action, the evidence supporting it and the practical consequences of further delay.
4. Escalate formally. Use the insurer's complaints process. For complaints covered by ASIC's RG 271, the usual maximum internal dispute resolution response period is 30 calendar days, subject to permitted exceptions and notification requirements.
5. Assess the right forum and remedy. Obtain advice on AFCA eligibility, contractual payment rights, declarations, damages where established and any urgent court relief.

AFCA access depends on its Rules, including eligibility, insurer membership, policy and complaint type, time limits, monetary jurisdiction and compensation caps. Not every commercial policy dispute qualifies. Making a complaint should not be assumed to preserve court limitation periods or replace urgent relief.

Consider interest, not just the principal claim

Where s 57 of the Insurance Contracts Act applies, an insurer liable to pay an amount under the contract or Act must also pay interest from when it became unreasonable to withhold that amount, at the prescribed rate. Interest does not automatically run from notification, and a separate s 13 breach is not a prerequisite.

Damages for a contractual breach, including breach of the implied good-faith obligation, require proof of breach, causation and recoverable loss. They are not automatically equal to the expense of every delay, and the ASIC penalty is not a fund payable to the policyholder.

08 The lesson extends beyond home insurance

The factual setting was domestic property damage, but the statutory duty can matter in commercial property, industrial special risks, contract works, business interruption, professional indemnity, directors and officers and management liability claims where the Act applies.

The Act does not govern every insurance arrangement. Governing-law rules and statutory exclusions must be checked, including those concerning reinsurance and contracts to which the Marine Insurance Act 1909 applies. A specific pleasure-craft exception means not every policy involving a vessel is excluded. Other excluded classes require separate assessment.

The commercial consequence of delay may be a damaged production facility, interruption to revenue, unpaid defence costs or uncertainty while litigation against the insured proceeds. Each involves different policy terms and evidence. Hollard does not resolve those coverage questions.

What it does demonstrate is why the final decision letter is only part of the picture. The chronology, material evidence, communications and response to worsening loss may be equally important when assessing whether the claim was handled lawfully.

09 How GopherWood Lawyers can help

GopherWood Lawyers acts exclusively for policyholders in insurance coverage and litigation disputes. We advise companies, directors and officers, builders, contractors and financial services businesses where an insurer declines, delays or reduces a claim.

Our work includes disputes concerning policy interpretation, causation, exclusions, expert evidence, cash settlements, defence costs and indemnity. We assess the insurer's position against the policy wording, the evidence and the applicable statutory framework, and advise on the available options for resolution or litigation.

If your insurer is delaying a claim or failing to address ongoing damage, contact GopherWood Lawyers for a confidential discussion.

10 Sources and further reading

Reviewed as at 28 October 2026. The outcome and payment figures are drawn from ASIC's official announcement. Detailed chronology is identified as coming from ASIC's pleading, which is not itself a judgment. The seven-failure and single-contravention descriptions are corroborated by published case commentary. The court's full reasons could not be independently accessed for this review. This article is general information, not advice about a particular policy or claim.

1. ASIC, 26-236MR: Hollard fined $2 million for serious insurance claim delay: official outcome, judicial quotation, claim payments and first-penalty description.
2. ASIC v Hollard Insurance Partners Limited [2026] FCA 1487: official judgment link supplied by ASIC; full reasons were not independently accessible during this review.
3. ASIC's sealed concise statement, VID448/2025, 10 April 2025: pleaded chronology and claim decisions, not final judicial findings.
4. Bright Law, claims-handling breaches penalty case note: reported seven-part admitted conduct.
5. Clyde & Co, Federal Court guidance on civil penalties: practitioner analysis of the single admitted contravention.
6. Insurance Contracts Act 1984, compilation in force from 8 October 2026: ss 8–9A, 13–14 and 57.
7. CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36: the duty of utmost good faith.
8. ASIC RG 271, Internal dispute resolution: applicable complaints requirements and response periods.
9. AFCA, insurance complaints and small-business eligibility: jurisdiction must be checked against the Rules.
10. Corporations Act 2001, Part 7.7 Division 3A and ASIC INFO 253: Cash Settlement Fact Sheet requirements.