An insurer and a broker have won a dispute over a fire claim that was rejected because the policyholder inaccurately disclosed property and occupancy details. 

The complainant made an online application for cover via broker Insurance Advisernet Australia, stating the location was 44 “D” Street, one tenant had a “cosmetics – retail” business and the premises was occupied. 

But, when later declining her claim, the insurer said the policyholder had not disclosed that the lot comprised 40, 42 and 44 D Street, and the occupancy threshold was not reached.

A police report showed a boutique had set up at 42, another tenant used 44 to store imported tableware, and a semi-detached residence was not used.

Hollard Commercial Insurance concluded 40 and 42 were interconnected adjoining shops, with 40 vacant since the Covid-19 pandemic started. Storage at 44 did not meet its “occupied” definition.

The complainant argued the online platform defaulted to 44 D Street and the postal address included two shops under the same roof and the residence; there was no 40 D street.

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The residence was used for storage, regularly checked and occupied for business purposes, the policyholder said.

In a dispute ruling in favour of the insurer, the Australian Financial Complaints Authority acknowledges “some confusion about whether 40 D Street exists”, but it finds the complainant disclosed only one location.

It says the residence comprised 30%-50% of the overall structure, and even if storage amounted to occupation, the complainant did not disclose that use or that there were two tenants.

“A reasonable person in the circumstances could be expected to know that the number of street addresses and tenancies to be insured and the extent of building unoccupancy would be relevant to the insurer’s decision on whether to accept the risk,” AFCA says.

The authority’s decision in favour of Insurance Advisernet Australia notes the complainant, after buying the property in 2013, advised it comprised two shops at 42-44 D Street and a residence with shared kitchen and bathroom. 

In 2024, when applying for the policy at the centre of the dispute, the complainant dealt with her original broker’s son following the parent’s retirement. 

AFCA finds the broker informed the complainant of proposal details, asked her to advise of any changes, and outlined the disclosure duty. 

“I accept that the duty the broker owed the complainant was increased given its knowledge of her limited English language skills. Further, that it could and should have done more to ensure 42 and 44 D Street were both listed as the insured locations,” an AFCA ombudsman says. 

But the authority is not satisfied the broker breached its professional duty of care. 

See the decision here.