Homeowner Successfully Challenges Insurer in Disclosure Dispute

9

According to Auto & General Services, it denied the claim for flood damage because the homeowner failed to disclose that he had been running an air conditioner and refrigerator retail business from the shed. The insurer pointed out that during the most recent policy renewal, the homeowner confirmed that no part of the property was used for business activities or for buying, selling, or storing business products or equipment.

The homeowner admitted to operating a business out of the shed but argued that he was not required to disclose the details because the policy specifically excluded coverage for business and farming structures, including sheds. He emphasized that the policy referred to the insured dwelling as a "freestanding house" and that any losses to the shed were covered by a separate business insurance policy.

The Australian Financial Complaints Authority (AFCA) sided with the homeowner, stating that the home and contents policy did not cover the shed and it was fair for him not to disclose the business. AFCA ruled that when the homeowner answered the insurer's question about whether any part of the "property" was being used as a business premises, he understood the question to refer only to the freestanding residential dwelling where he lived. AFCA also noted that the certificate of insurance specifically mentioned the freestanding home and did not include any reference to outbuildings or sheds.

As a result of the ruling, Auto & General is now required to accept the claim and appoint a qualified expert to prepare a scope of works for repairs to the insured property. The insurer must arrange and complete the repairs or provide a cash settlement with a 15% contingency. AFCA has also instructed Auto & General to assess the homeowner's entitlement to temporary accommodation benefits and reinstate his policy.

Published:Saturday, 9th Dec 2023
Source: Paige Estritori

Share this news item:

Insurance News

Clear

ASIC Extends Relief on Distribution Rules for Insurance Providers

16 Sep 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has announced an extension of the exemption allowing general insurance providers to forego appointing product distributors as authorised representatives. This decision comes with the introduction of a new legislative instrument, 2025/520, which renews the previous framework, originally established under instrument 2015/682. The relief will now continue until August 27, 2030. - read more

Cyber Insurance Becomes Essential Amid Rising Digital Threats

12 Sep 2025: Paige Estritori

The recent cyberattack on Fortnum Private Wealth, accompanied by ASIC's legal action, has spotlighted the critical risks cyber threats pose to financial advice companies in Australia. With digital integration intensifying across the finance sector, the owner of Fortnum, Entireti, plans to defend the case, underscoring the necessity for ongoing vigilance in cybersecurity measures. - read more

Swiss Re Foresees Rising Premiums Amid Increasing Global Risks

10 Sep 2025: Paige Estritori

In a comprehensive analysis, Swiss Re Institute predicts that global property and casualty insurance premiums will rise in tandem with GDP over the upcoming decade. This growth is driven by amplified natural catastrophe losses, asset accumulation, and heightened economic and litigation claims inflation. The institute's report outlines the evolving insurance landscape amid increasing global risks. - read more

Insurance Council of Australia Assists NSW Flood Claimants

09 Sep 2025: Paige Estritori

In response to the devastating floods that swept across New South Wales' Mid North Coast in May, the Insurance Council of Australia (ICA) is taking proactive steps to support the affected residents. Insurers, organised by the ICA, will be meeting with flood victims in Kempsey, Taree, and Port Macquarie to provide guidance and support as they navigate their insurance claims. - read more

Ombudsman Upholds Policyholder’s Claim Despite Fraud Allegations

08 Sep 2025: Paige Estritori

A motor insurance policyholder has won a significant dispute over fraud allegations, with the industry ombudsman ruling in favour of a payout following a controversial car accident claim. The case revolved around an incident where the claimant's wife crashed at an intersection one evening, reportedly failing to yield. The lack of photographic evidence due to shock and subsequent involvement of towing services complicated matters. - read more

Click for more Insurance News