S54 of the Insurance Contracts Act 1984 (Cth) may well be the bane of all insurers as it is really a double-edged sword. In essence, it prevents an Insurer from relying on a breach of a policy condition to deny a claim because the insured has committed a particular act, error or omission (after the policy is entered into) which did not cause or contribute to the loss. However, the insurer may instead, reduce the claim to the extent of the prejudice it has suffered. If the act, error or omission caused or contributed to the loss, then the insurer can refuse to pay the claim.