Insurers are likely to void policies held by landlords if it is discovered illegal activity has been carried out at their premises, an industry expert says.

Last month, police warned shop landlords that illegal cigarettes and vapes found in tenants’ premises may invalidate insurance claims if there is an arson attack.  

Firebomb attacks have hit 59 tobacco stores across Victoria amid a gangland turf war, and Taskforce Lunar detectives have arrested 62 people in connection with the spate.

LMI Group MD Allan Manning says policies may be voided due to illegal activity.  

“If the insurer is able to demonstrate that they would not have taken on the risk had they known its true occupation, then they can deny liability for any claim, but they would need to cancel from inception and refund the premium in full,” he told insuranceNEWS.com.au.

Police letters sent to shop owners across Victoria urged landlords to contact their insurers, warning of potential “adverse impacts” on coverage.

“Owners need to be aware of this and of who is leasing the buildings they own,” Victoria Police Crime Command acting commander Jason Kelly said. “We need to look at innovative ways to target this issue. One way of doing this is by speaking to those who own these properties and lease them to people actively engaging in organised crime.”  

Taskforce investigators notify insurers if there is evidence illegal products were sold from attacked premises, according to the letters dated May 21.  

“The [attacks] have led to general discussions between police and insurance companies,” the letters say. “It is recommended that you raise this matter with your insurer forthwith, as knowledge of this alleged conduct may adversely impact on the status of your insurance should it not be disclosed.”