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Underwriting agencies defend industry after 'side hustle' furore

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Underwriting agencies have stepped up to defend the insurance industry, following media reports that home and contents policies are being cancelled or claims denied due to a lack of disclosure around business activity at insured addresses.

The industry has come under fire since ABC News reported many consumers who ran home-based businesses were told to look for a new insurer. Some consumer groups have accused the industry of selling “junk” cover to customers who run a side hustle for extra income.

A senator is also pushing for changes to home and contents policies to protect business owners who operate from their residential properties.

The Underwriting Agencies Council (UAC) says its members have been offering products designed for home-based business owners and that the debate about whether domestic insurance policies should cover these operations lacks an understanding of how the insurance market operates.

“Traditional domestic home insurance policies were not designed to cover businesses operating from home because the risk assessment is different,” UAC GM William Legge said.

“Some insurers may offer a policy extension, which will likely be individually risk-rated, depending on the type of business the insured operates and many other factors, for example, whether customers or delivery drivers come to the home premises.”

He says consumers seeking tailored products, like coverage for specific home-based businesses, should access the underwriting agencies market via an insurance broker.

UAC members are niche, specialist insurance agencies that predominantly conduct business through brokers, writing cover on behalf of their principals, many of which are Lloyd’s syndicates, Mr Legge says.

He says engaging an insurance broker means consumers can access the full range of product availability and there are many agencies that offer specific insurance products for home-business operators.

Amazon Underwriting, a UAC member, has also weighed in on the matter.

“The key message I’d like to get across is there is a solution,” Amazon Underwriting founder Gida Irving told insuranceNEWS.com.au.

She says Amazon Underwriting has been offering a HomeBiz Property Insurance policy since 2016, a product that provides home and contents and business property protection under one cover. The Lloyd’s-backed policy covers areas such as domestic assets and business equipment, stock, merchandise and machinery breakdown.

Ms Irving says it is important for consumers to understand that home and contents products are not designed to insure business-related risks.

“The difficulty with home-based businesses is that the premises is both a domestic residence and a business premises so the risk doesn’t fit under the domestic silo because of the business and the business doesn’t fit under the commercial silo because of the domestic residence,” she said. “So they fall between the cracks.”

She says Amazon Underwriting has been fielding plenty of calls from brokers whose clients operate businesses from home since the ABC News reports.

“Brokers have advised the client experience ranges from their policy being cancelled on the spot to others being given five days to find alternative insurance,” she said.

She says this is also a chance for brokers to demonstrate the value they provide. “A broker can have a detailed look and explain the exposures and say ‘this is what your exposures are in your business’ because home-based working risks are different.”