QBE has won a dispute with a landlord after showing it would not have offered cover if it knew the insured property’s tenant was a manufacturer and there was asbestos in the roof.

The commercial site was leased to a maker of vitamins and supplements, but the landlord and its broker had together listed the business as “health foods wholesaling” on QBE’s online portal for intermediaries.

In October 2022, the broker lodged a claim for fire damage at the property, which had a sum insured of $2 million.

QBE declined the claim and cancelled the policy, saying several misrepresentations breached the landlord’s duty of disclosure.

The Australian Financial Complaints Authority agrees incorrect information was provided by the broker on the landlord’s behalf when incepting the policy.

And it rejects the landlord’s argument that QBE was adequately notified of the tenant business’ true nature via previous incomplete applications, including one nominating a sum insured of $6.5 million.

“The landlord ... cannot rely on previous application answers as applying to this application,” it said. “The panel is satisfied this was a misrepresentation.”

QBE’s senior underwriter said disclosure of the manufacturing business would have produced a hazard index score of 10, which together with a sum insured of more than $1.5 million would have triggered a referral for a survey.

Selecting “health foods wholesaling” produced only eight on the hazard index.  

The application form also asked about roof construction and gave options including asbestos. The broker selected “iron/steel/aluminium” even though asbestos was present. 

Asbestos roof sheeting would have brought an automatic rejection in QBE’s system, and AFCA says the “presence of asbestos is a material fact that a reasonable broker would know is relevant to an insurer’s decision in accepting a policy”. 

However, some of the insurer’s arguments were not upheld. 

AFCA is not satisfied QBE established non-disclosure of expanded polystyrene or that previous applications should have been disclosed as “policy declinatures”. 

“They were simply applications that did not proceed. The panel is not satisfied that this is a misrepresentation.” 

A request by the landlord – who also sought an apology from QBE – that the insurer contribute to its legal costs was rejected. AFCA says the dispute was “not overly complex” and legal representation was unnecessary.  

See the ruling here.