Insurer's Compensation for Fire-Damaged Property Sparks Controversy
Insurer's Compensation for Fire-Damaged Property Sparks Controversy
1
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
A property owner’s attempt to increase his fire damage compensation has been thwarted after admitting to deliberately underinsuring his property to cut costs.
The controversy has highlighted potential pitfalls for homeowners seeking to reduce insurance premiums.
Hollard Insurance had initially declined the claim following a fire in October 2021, pointing to non-disclosure issues. However, upon the homeowner's appeal to the Australian Financial Complaints Authority (AFCA), the insurer revised its stance.
Hollard agreed to settle the claim with a payment of $415,937, allocating $300,437 for the building damage and $12,875 for contents, in addition to payments for temporary housing, non-financial loss compensation, professional fees, and accrued interest.
Despite this, the property owner contended the settlement was not fair, arguing his home and belongings were underinsured. Hollard defended the settlement, noting it was still higher than the policy’s insured amounts of $240,350 for the home and $10,300 for the contents.
The homeowner had purchased the policy through his bank, which acted as an authorised representative of the insurer. He claimed the bank's employee had provided financial advice without adequately understanding his financial situation or reviewing his personal circumstances. Additionally, he mentioned not receiving the policy documents.
In its ruling, the AFCA stated that based on the information provided, there was no substantial evidence that the bank's representative offered personalized advice.
“Though the complainant suggested that the representative promised to handle all the coverage details, the panel did not find sufficient proof that personal advice was given,” noted the AFCA.
The authority further emphasized that during an interview with the insurer, the complainant had confirmed receiving and reviewing the policy's product disclosure statement and insurance certificate, thus acknowledging the insured amounts and the underinsurance to reduce premiums.
“I didn’t foresee this type of incident happening, so I underinsured some things to pay a lower premium,” admitted the complainant.
With this acknowledgment, the AFCA supported the insurer's position to settle based on the confessed amount.
Furthermore, the AFCA dismissed the complainant’s request for additional legal fees amounting to $27,500, over and above the $5,000 already provided by Hollard. The complainant claimed that his cognitive impairment made self-representation unfeasible.
But the authority concluded that there was inadequate evidence to substantiate the extent of his cognitive impairment and asserted that Hollard had justifiable reasons to scrutinize the claim, leading to legal expenditures.
Published:Sunday, 4th Aug 2024 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
In a significant ruling, the Supreme Court of New South Wales has imposed fines totaling $16.8 million on Allianz Australia Insurance and its subsidiary, AWP Australia, for disseminating misleading information about their travel insurance products between 2016 and 2018. This decision underscores the critical importance of transparency and accuracy in the insurance sector. - read more
Recent research conducted by the Insurance Council of Australia (ICA) and the Department of Foreign Affairs and Trade (DFAT) has unveiled a concerning trend: approximately 14% of Australian travellers embark on international journeys without any form of travel insurance. This statistic has prompted Allianz Partners to urge Australians to reconsider the importance of securing adequate coverage before travelling abroad. - read more
In 2024, medical incidents emerged as the leading cause of travel insurance claims among Australian travellers, accounting for more than 40% of all claims handled by nib Travel. This trend underscores the critical importance of securing comprehensive travel insurance to mitigate the financial risks associated with medical emergencies abroad. - read more
In 2024, Australia's insurance industry reported an after-tax profit of $6.1 billion, a figure that is three times higher than the five-year average of $2 billion. This substantial increase is attributed to significant premium hikes and a relatively benign year for natural disasters. - read more
Homeowners in Northern Australia are grappling with substantial increases in insurance premiums, despite the federal government's establishment of a cyclone reinsurance pool in 2022 aimed at reducing costs. This trend has raised concerns about the effectiveness of the initiative and the affordability of insurance in cyclone-prone regions. - read more
Australian consumers are increasingly facing substantial hikes in their insurance premiums, often with minimal or no explanation from insurers. This lack of transparency has led to growing concerns and calls for greater clarity in the industry's pricing strategies. - read more
The Insurance Council of Australia (ICA) has recently released a white paper highlighting the urgent need for reforms to state and territory civil liability laws, which have remained largely unchanged for nearly 25 years. These outdated laws are contributing to significant increases in public liability insurance premiums, affecting a wide range of businesses across the nation. - read more
The Australian Amusement Leisure & Recreation Association (AALARA) has raised concerns over the escalating costs of public liability insurance, which are placing significant pressure on amusement and recreation operators across the country. This warning follows the Insurance Council of Australia's (ICA) recent call for reforms to civil liability laws. - read more
The Australian Prudential Regulation Authority (APRA) has released its latest National Claims and Policies Database (NCPD) statistics, revealing a substantial increase in public liability insurance premiums over recent years. According to the data, premiums have risen by 40% since 2015, a rate that surpasses general inflation and places additional financial strain on businesses across the country. - read more
In a significant ruling, the Australian Financial Complaints Authority (AFCA) has directed QBE Insurance to honour an arson claim from a restaurant, despite the director's failure to disclose his criminal history during the policy's inception. This decision underscores the complexities surrounding disclosure obligations and the importance of clear communication between insurers and policyholders. - read more
Farming in Australia is more than just a way of life; it is a critical sector that supports the nation’s economy and food supply. However, managing a farm comes with its own set of unique risks. From natural disasters to equipment failures, farmers face numerous challenges that can impact their livelihood. - read more
Welcome to the defining era where technology and agriculture entwine, bringing forth the digital farmer's era. With the evolution of agribusiness in the tech age, comes an array of new tools, opportunities, and risks. As a custodian of the earth and steward of the latest innovations, safeguarding your digital farm is just as crucial as nurturing your crops and livestock. - read more
Farm liability insurance is a type of coverage that protects farmers from financial losses due to legal claims and lawsuits. This insurance is crucial for safeguarding your farm against various liabilities that may arise from farm operations. - read more
Welcome to the world of farming, where the fruits of your labor are as tangible as the soil you till. But just as the land is subject to the whims of nature, so too is the business of agriculture. This is where farm insurance becomes essential. Farmers face a set of challenges and uncertainties unlike any other industry, primarily due to the unpredictable forces of weather. - read more
In the dynamic world of Australian agriculture, farm equipment plays a crucial role in the day-to-day operations of farms. From tractors to harvesters, having the right machinery means managing your farm more efficiently. However, the high value of this equipment makes it essential to protect it adequately through insurance. - read more
As the backbone of Australian agriculture, farm equipment plays an essential role in day-to-day operations across our expansive and diverse landscapes. From the vast wheat belts to the tropical fruit farms, machinery ensures efficiency and productivity in the face of constant challenges. But with reliance on such equipment comes significant risk—the financial burden of damage or loss can be devastating to a farmer's livelihood. - read more
Australian farmers face an array of natural disasters that can threaten livelihoods and disrupt the delicate balance of agricultural ecosystems. From devastating bushfires and droughts to powerful storms and floods, these catastrophic events pose serious risks to the farming community. Understanding and preparing for these forces is not just about survival; it's about building a sustainable future for farms across the continent. - read more
For Australian farmers, livestock is more than just a vital asset; it's the heartbeat of their livelihood. In a land where the sunburnt plains are as relentless as they are beautiful, protecting your herd isn't just a duty; it's a necessity. That's where livestock insurance comes into play—a shield against the unpredictability of Mother Nature. - read more
Crop insurance is a type of insurance policy designed to protect farmers from the financial losses that arise from damages to their crops. This could be due to various risks, including adverse weather conditions, pests, and diseases. - read more
Farming is inherently risky. With factors like weather, pests, and market fluctuations affecting crops, it's crucial to manage these risks effectively. - read more
Need a Quote?
Start your free farm insurance quote comparison here.
Knowledgebase
Actuary: A professional who analyzes the financial costs of risk and uncertainty using mathematics, statistics, and financial theory.