After paying home insurance for 20 years, Caroline was told that operating a food truck canceled her policy on the spot

Thousands of Australians with side businesses or hobbies may unknowingly take out home and contents insurance which essentially leaves them unprotected.

Key points:

• An ABC investigation earlier this month revealed insurance holders with an ABN registered in their homes may not have coverage
• A couple in the Victorian area canceled their home insurance policy because they had a food truck in their yard
• The Australian Financial Complaints Authority says people should file a complaint with the ombudsman if they are unable to resolve the issue with their insurance company

Several people have filed for immediate cancellation of their policies following an ABC investigation into failed insurance claims at the Heywood farm.

Griffyn Branagh last week called his insurance company AAMI, which is owned by Suncorp, to check if his mobile bike repair business was affecting his content insurance for his rental home in Torquay.

Before the pandemic hit, Branagh would travel to people’s homes to fix bikes, but switched to picking them up and bringing them back to his garage in 2020.

He was told his content insurance would be canceled by the insurance company because his business was at high risk.

An AAMI spokesperson said the company’s home insurance policies are priced for domestic private home risk, and that when the business is run from home, that risk can change “significantly”.

“We communicated customer answers to our policy screening questions – which include questions relating to operating a business from home – and asked them to confirm their accuracy,” the spokesperson said.

Mr Branagh pays $10,000 a year for separate business insurance and is an AAMI customer for 15 years.

“We started the business not realizing we weren’t allowed, nobody ever questioned us about it,” he said.

“It wasn’t until we saw last week’s story that the light bulb went out and I thought ‘damn, we’re in trouble’.”

Griffyn Branagh started repairing bikes in his garage in 2020.(ABC News: Rachel Clayton)

Mr Branagh said he called several other big insurance companies, none would insure the contents because of the bicycle business.

“Insurers have the right to decide the level of risk they will bear and how to price it,” said Consumer Action Law Center chief executive Gerard Brody.

But experts warn thousands more could be affected.

“It sounds very systemic,” said Brody.

“If you get into an insurance policy and something goes wrong, or the policy will never cover you, you could say there’s a claim to get your premium back because the policy is absolutely rubbish.”

Mr Brody said he would encourage the insurance industry to “see fairness in what they do and come up with better solutions for their customers”.

Food truck causes insurance cancellation

Dean and Caroline McLaren pay a premium of $4,500 a year with CGU, which is owned by the Insurance Australia Group, for 20 years of home and contents insurance in the Victoria area.

Last week, McLaren was also notified that its policy would soon be overturned as the food truck the couple operated for the past five years was registered at their home address.

Caroline McLaren learns that her food truck registered at her Victorian home has canceled her insurance policy.(provided)

“We’re not trying to claim the food truck at all, we have separate business insurance for that,” he said.

“It’s not something we’re trying to hide. It never occurred to me to mention it to them.”

A CGU spokesperson said the company’s policies “are not designed for customers operating a business from home, for example, commercial cooking in a home kitchen, where there is an increased risk of accidents due to the work performed”.

They say customers are required to notify the company of any changes that could “affect various risks to their property, such as running a business from home” and it informs “customers of this requirement and the importance of this when they take out the policy and when they receive the policy renewal documents. they”.

There is no part of the business being run from their home other than the occasional chopping of vegetables.

Mr McLaren said company representatives at CGU did not ask questions about the food trucks, or what, if any part of the business, was run on his property.

Because the insurance agent canceled the policy, the couple were given two weeks’ notice to seek cover with another company.

“I asked them: what if the house catches fire in the next two weeks? Will we be covered?” he says. McLaren said he was not given an answer.

He also said CGU told him it was part of the couple’s “disclosure duties” to inform the company about the food truck.

But changes made in October last year to the Insurance Contracts Act mean proponents argue that is not entirely true.

The royal commission changed the law last year

Following royal commissions into the financial services industry, the duty of disclosure for consumers was relaxed and the onus was placed on insurance companies to ensure their customers knew what they needed to disclose.

The change means consumers now have an “obligation not to mislead”, meaning they must take care to answer questions correctly, but do not have to provide information voluntarily.

Insurance company AAMI says people should disclose whether they run a business when setting up home insurance.(ABC News: Rachel Clayton)

A spokeswoman from the Australian Insurance Council said there were “many insurance companies that offer multiple home and content insurance policies”.

“Each insurer uses different underwriting criteria, and therefore products may differ in the coverage offered and their costs,” the spokesperson said.

They say the insurance company will explain what the customer’s disclosure obligations are.

Hayriye Uluca, principal attorney at Maurice Blackburn, said the matter could fall under the protection of unfair term contracts if everyday consumers were “in a weak bargaining position”.

Hayriye Uluca, Maurice Blackburn’s lead attorney.(Provided: Maurice Blackburn)

Only a court can determine whether a contract’s terms are unfair. According to ASIC, a contractual requirement may be deemed unfair if it would cause a significant imbalance in the rights and obligations of the parties arising under the contract, is not reasonably necessary to protect the legitimate interests of the parties who would benefit from the term, and would be detrimental to the consumer if enforced. or reliable.

Ms Uluca also said if a customer has an insurance claim that was denied based on the material of the guarantee, the consumer should have the right to see the policy on the risk covered.

The Australian Financial Complaints Authority’s chief insurance ombudsman, Emma Curtis, said customers should file a free complaint with the ombudsman if they were unable to resolve the issue with their insurer.

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