Introduction: Estimating insomnia prevalence in epidemiological studies is hampered by variability in definitions and interpretation of criteria. We addressed the absence of a population-based estimate of insomnia in Australia using the widely accepted contemporary International Classification of Sleep Disorders (ICSD-3) criteria, which includes sleep opportunity, and has not been applied in studies to date. Consistent use of these criteria across epidemiological studies, however, requires evidence of the clinical utility of a sleep opportunity criterion for targeting strategies. Methods: A cross-sectional national on-line survey (2019 Sleep Health Foundation Insomnia Survey) of Australian adults (18–90 years, n = 2044) was conducted. Chronic insomnia was defined as sleep symptoms and daytime impairment experienced ≥3 times per week, and present for ≥3 months, with adequate sleep opportunity (time in bed (TIB) ≥7.5 hrs). Self-rated general health (SF-1) and ever diagnosed health conditions (including sleep disorders) were assessed. Results: Chronic difficulties initiating and maintaining sleep and daytime symptoms (n = 788) were more common in females (41.5%) than males (35.3%), p = 0.004. Excluding participants reporting frequent pain causing sleep disruption and TIB <7.5 hrs generated an insomnia disorder estimate of 25.2% (95% CI: 22.5–28.2) in females and 21.1% (18.4–23.9) in males [23.2% (21.2–25.2) overall]. This compares with 8.6% (7.3–10.0) with insomnia symptoms and TIB <7.5 hrs and 7.5% (6.4–8.7%) ever diagnosed with insomnia. Insomnia symptom groups with TIB <7.5 and ≥7.5 hours demonstrated similar odds of reporting fair/poor health [odds ratio (OR): 3.2 (95% CI: 2.1–4.8) and 2.9 (95% CI: 2.2–3.9) respectively], ≥1 mental health condition, ≥1 airway disease, and multimorbidity. Conclusion: Adults with significant sleep and daytime symptomatology and TIB <7.5 hrs did not differ clinically from those with insomnia disorder. Consideration of criteria, particularly adequate sleep opportunity, is required to consistently identify insomnia, and establish health correlates in future epidemiological studies. Further evaluation of the clinical utility of the sleep opportunity criterion is also required.