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Disclosure failure: boarding house owner loses dispute

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A homeowner who failed to disclose that his property was being used as a boarding house will not have fire damage covered by his insurer after losing a claims dispute.

Suncorp denied the complainant’s home and contents claim, saying that if the insurer had been aware that the home was used as a boarding house, it would not have offered to renew his policy.

The Australian Financial Complaints Authority (AFCA) determined that Suncorp was entitled to deny the claim, saying the policy clearly informed the man of his duty to disclose the purpose of the property.

The fire likely stemmed from a laptop battery charger, causing significant damage to the building on July 30 2020. Six occupants resided at the dwelling at the time of the fire, none of which were the homeowner.

Before policy renewal in April 2020, documents were sent showing the owner lived at the property and that it was not used for business purposes, but he later admitted that he did not read them.

The documents told the complainant he was required to inform the insurer if any details had been changed or were incorrect.

“If you do not tell us about a change to something you have previously told us, you will be taken to have told us that there is no change,” Suncorp’s Certificate of Insurance (COI) said.

The man later said he moved out of the home in March 2020 while the six other occupants lived at the property and provided him with a weekly allowance for the accommodation.

Suncorp provided a notice issued from the local council on July 16 2020, which showed that it believed the building was a boarding house.

AFCA agreed with the insurer’s assessment that the home was being used for business purposes and reaffirmed that the complainant failed to uphold his duty to disclose this information to the insurer.

The panel said that the purposes of the home were relevant to the insurer’s ability to assess risks and willingness to provide cover for the building.

AFCA said the insurer showed enough information to prove that if it had been aware of the true circumstances, it would not have provided the homeowner with a policy renewal.

It ruled that Suncorp was not required to cover the fire damage but said it must refund the complainant’s policy premiums from the April 30 2020 renewal.

Click here to read the full ruling.