QLD Declined Home Insurance Renewal Due to Claims Experience?

Discussion in 'Insurance Law Forum' started by lcj, 9 December 2018.

  1. lcj

    lcj Member

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    We are semi-retired and have a house with a handcraft gallery attached, built six years ago. Originally we had difficulty finding an insurer who would cover a residence and business in one building. Now our insurer has declined our insurance renewal due to claims experience. This is now giving us difficulty finding another insurer as we have had home insurance declined.

    We have made two claims in the past two years and in both instances, the insurer either tried to get out of paying or tried to avoid a large part of the claim.

    1. We had a water leak 500mm under a concrete driveway that damaged two slabs of concrete. The insurance company only wanted to make a hole in the concrete and fix the leak, not replace the damaged concrete.

    We are 75 minutes out of Cairns and the insurer separately send up 8 people to inspect the concrete (including the plumber who attended twice). The last was an engineer, who said the concrete was damaged by the water leak and then the claim was settled. The ultimate cost went from, I guess $1500 to fix the leak, to $23,938. This included $16,271 settlement + plumber + all the other guys attending property.

    2. A chair was pushed under a workbench, on top of the foot control of a pendant motor (hanging drill). This caused the motor to spin at top speed, wrap around a string bag that was next to it, stopping the motor and causing the motor to burn out. The Insurer tried to avoid paying by saying the policy did not cover things caused by a motor burning out. I pointed out that the damage was caused by an accident, the chair being pushed under the workbench, not the motor burning out. The claim was $1020 - $500 excess. The insurer paid $520.

    The first claim, the water leak, was not caused by us and the likelihood of it happening is probably similar to storm damaged. The second claim, is I guess, a small claim.

    The insurer declining policy renewal seems to be more about the insurer trying to avoid paying and not getting away with it. Than ourselves being a high risk.

    Now we have to declare that we have had insurance declined and are having difficulty finding an insurer.

    Do these two claims constitute a valid reason to decline insurance due to claims experience, thereby making it difficult to obtain insurance with another insurer? Or is this just a case of, the insurer using this as a reason not to renew the policy?

    Any assistance appreciated.
     
  2. Rob Legat - SBPL

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    For the most part, insurers are under no obligation to provide insurance or to offer a renewal. They can refuse purely based on ‘risk rating’ by determining your situation presents an unacceptable risk for them.
     
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  3. Zerojay

    Zerojay Well-Known Member

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    Agree with Rob’s post. Your best bet may be to engage a local insurance broker to arrange cover for you. Due to the special relationship the broker has with insurers, they are much more likely to be able to find an insurer that will provide cover.
     
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  4. DMLegal

    DMLegal Well-Known Member

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    It appears from your post where you state "We are semi-retired...' you are referring to both you and your spouse. If so, check whether the 'declined' Policy is in the name of both you and your spouse. If it is not you could obtain the new Policy in the name of the person who is not currently named on the Policy; this should remove the issue of answering 'yes' to the question of whether you have had a renewal declined, since the unnamed spouse was not associated with the old Policy. Just a thought :)
     
  5. Zerojay

    Zerojay Well-Known Member

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    I think the insurance companies are awake to the suggested ruse. The questions about insurance history on the proposal are generally addressed to “you and anyone else who will be covered under this policy”.

    In any case being sneaky is not recommended as it is a breach of the insurance contracts act and could backfire on you big time - for example a claim may be denied on the basis that had the truth been provided the cover would not have been issued. Image what this could cost you for say major cyclone or fire damage.

    I do not give legal advice, just my opinion based on working for an insurance company for over 20 years.
     
  6. DMLegal

    DMLegal Well-Known Member

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    I appreciate where you're coming from, however -

    1. I think you may have misunderstood my post since my suggestion would only work if the OP or the OP's spouse was the only insured person on the 'declined' policy. If this were the case I can see no issue in merely swapping one insured for the other.
    2. I also wouldn't call it sneaky, indeed why should a person be refused insurance for contents because another person in a household was not able to renew their Policy.
    3. I just can't imagine my suggestion being considered a breach of the insured's duty of disclosure, although this is simply my opinion..
     
  7. Zerojay

    Zerojay Well-Known Member

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    Aren’t we talking about an insured and spouse situation where the home/contents are jointly owned? The questions on the proposal obviously apply to both, regardless of proposal being in either name, because both have an insurable interest. If the questions are not answered truthfully then it is a misrepresentation and also could be a breach of S13.

    There is nothing wrong with an insurer refusing insurance to one person because the other joint owner of the house/contents has previously not been offered renewal. Regardless of which one applies for cover, the property has the same claims history that caused the insurer to elect not to offer renewal. Note I am not saying the decision was a fair one.
     
  8. Tim W

    Tim W Lawyer
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    Do we know what kind of policy has been declined?

    I wonder if the OP might simply be seeking the wrong kind of policy?

    I say this because in insurance-think, the risk profiles attached to say,
    • a business with a residence attached
      (think "a flat above the shop"), compared to

    • a bona fide dwelling from which a (home) business operates
      (think anything from accounting, to clothing alterations,
      all the way to mechanics working from home)
    can be quite different.

    Not to mention that any business carries with it
    • public liability exposure;
    • Workers Comp (or Income Protection) risk;
    • WHS obligations; and,
    • being a gallery (retailer), some sort of risk
      related to any consigned/bailed goods
      (such as the art on display, assuming you don't own it...).
    Also, "semi-retired" might be a problem. It's not a concept known to law.
    You're either retired, or you're not.

    A retired person might still be employed casually, seasonally, or on any other kind of
    ad hoc basis. Not enough, say, to affect their age pension entitlements.

    But, a person who is self-employed, or in a partnership, or somehow
    operating a small (or even micro) business, even in a numerically small way,
    (as long as it really is a business according to the ATO) is not retired,
    even if they "retired" from an earlier job.

    If however it's not a business, then it's a hobby. Even then, other parts of the law
    (eg: WHS, or Council Planning/ land use rules) might think it is
    (Yeah, I know. Go figure...).

    Which your gallery is, and what they think are the related (potentially insurable) risks,
    informs a prospective insurer's decision(s) about how much to charge you,
    or whether or not to cover you at all, or to continue to cover you.

    And the above is even before your personal Claims History is in play.
     
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  9. DMLegal

    DMLegal Well-Known Member

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    The question is typically phrased 'In the last three years have you or anyone to be insured under this policy had any insurance declined or cancelled, renewal declined, special terms imposed or had a claim refused?'. All I am saying is that the part '...you, or anyone to be insured under this Policy...' cannot, at least prima facie, be said to include a person who never held an insurance Policy...

    The question says nothing about whether the history insurable interest, thus the 'claims history of the property' is irrelevant.

    Fair call Tim, I just assumed from the OP had a standard Home & Contents Policy, good point re the type of Policy.
     
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