Auto & General will be required to accept a home damage claim after its decision to decline due to the claimant’s misrepresented claims history was overruled. 

The insurer says it declined the claim after it uncovered that the complainant had failed to inform it of several burglary and theft claims he had lodged over the previous five years, which it notes had been a breach of its underwriting guidelines.

It says the homeowner had failed his “duty to take reasonable care not to make a misrepresentation” and that if it had been aware of his claims history, it would not have issued him the home insurance policy in August last year.

Auto & General says it consulted with its home insurance underwriter, referred to as BH, who provided a statutory declaration supporting the insurer’s decision.

However, the complainant challenged Auto & General’s contention that it would not have issued the policy if it had been aware of his claims history, highlighting that the insurer had renewed his other home insurance policy despite it being aware of the claims history. 

The Australia Financial Complaints Authority (AFCA) says the insurer failed to explain why it would continue to renew the homeowner’s other policy if its underwriting guidelines had clear stipulations for automatic denials.

“The renewal of the complainant’s home policy is inconsistent with its underwriting position,” AFCA said.

“The two are not reconcilable. That is, if the insurer does not insure people with the complainant’s claims history, it has not explained why it has offered renewal for the complainant’s other policy.” 

AFCA says BH’s statutory declaration did not discuss what the insurer would have done at the time the policy was renewed had it been aware of the claims history. "He instead refers to the fact the insurer cancelled the policy and reduced its liability once they discovered the complainant’s breach of the duty." 

It says that BH’s declaration “misses the point”.

“To establish prejudice under section 28(3) [of the Insurance Contracts Act 1984 Cth], the insurer’s evidence must step through what would have happened at the time of renewal had the complainant complied with his duty,” AFCA said.

“Such evidence would normally be set out by an underwriter with guidelines in support. BH’s statutory declaration does not do this.”

AFCA says it was not persuaded that the insurer had established that it had been prejudiced by the complainant’s breach of duty and required it to reinstate the policy and accept the claim after the policyholder pays any outstanding premiums.

Click here for the ruling.