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Auto & General to tweak fire cover terms after Choice lambast

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Auto & General Insurance, which underwrites brands Budget Direct, Virgin Money and ING, says it is making changes to its home insurance after being singled out in a scathing rebuke by Choice for what the consumer group describes as unfair fire definitions.

Choice accused the insurer of “failing Australian communities” and urged it to “fix” home and contents policy fire terms, which can exclude cover for damage caused by melting, smouldering or smoke.

Auto & General says it is a normal part of its product development process to regularly review its terms to “ensure we are making insurance easy and fair for all of our customers”.

“We are in the advanced stages of making changes to our Home Insurance PDS (Product Disclosure Statement) in relation to the items raised in the Choice article,” the insurer said in an email to insuranceNEWS.com.au today.

The changes are expected to be applied this year, it said.

Other major insurers have already updated their home and contents policies to address fire definitions dubbed by Choice as “confusing, unfair or unclear”.

Choice initiated a petition for change which warns Australian customers that Auto & General’s “confusing definitions could give them leverage to unfairly deny your claim”.

Seven major insurers already responded with changes to their fire insurance policies to “make them fairer,” the advocacy group says, after 43,000 Australians objected and “made their voices heard”.

Research last year found 70% of the insurance policies analysed by Choice contained “dodgy” fire definitions. Repeat analysis this month found only Auto & General and Youi still lagging, and Youi had since committed to changing its definitions while Auto & General had not at that time yet responded.

Underwriters that improved their fire definitions included IAG, QBE, RACQ and Suncorp.

Choice insurance campaigner Dean Price told consumers current policy wording allows “more wriggle room for Auto & General Insurance to get out of paying or rebuilding if the worst happens to your home” and said the insurer was “shamefully lagging behind on fair fire definitions for Australians”.

"Insurers must stop hiding behind tricky and confusing definitions of fire,” Mr Price says. “Our homes should be covered regardless of whether the fire damage is from flames, heat, or smoke.

“Leaving these dodgy definitions in place at this point just shows contempt for your customers."

Choice says a change brought in following the 2010-2011 Queensland floods ensures that now “a flood means the same thing in every insurance policy” but fire cover has no such standard.