Thousands of people with side businesses could have the wrong home insurance, experts say

Thousands of Australians with side businesses or leisure businesses may have unknowingly purchased home and contents insurance that leaves them essentially without cover.

Several people have announced the immediate cancellation of their policies after an ABC investigation into a failed insurance claim at a farm in Heywood.

Griffyn Branagh called her Suncorp-owned insurer AAMI last week to check whether her mobile bike repair business was affecting her contents insurance for her rented house in Torquay.

Before the pandemic hit, Mr Branagh used to go to people’s homes to repair bikes, but started collecting them and bringing them back to his garage in 2020.

He was told that his inventory insurance would be terminated by the insurer because his business was high risk.

A spokesperson for AAMI said the company’s home insurance policies were priced based on the risk of a domestic private home and when a business was run from a home, that risk could change “significantly”.

“We release customers’ answers to our policy screening questions — which include questions about running a home-based business — and ask them to confirm their accuracy,” the spokesperson said.

Mr. Branagh paid $10,000 a year for separate commercial insurance and was a client of IMAA for 15 years.

“We started the business not realizing that we weren’t allowed to, no one ever asked us about it,” he said.

“It wasn’t until we saw the story last week that the light bulbs went out and I thought ‘Holy shit, we’re in trouble’.”

Griffyn Branagh started fixing bikes in his garage in 2020.(ABC News: Rachel Clayton)

Mr Branagh said he called several other major insurance companies, none of which would insure his contents due to the cycling activity.

“Insurers have the right to decide what level of risk they will cover and how to price it,” said Consumer Action Law Center executive director Gerard Brody.

But experts warn that thousands more could be affected.

“It seems very systemic,” Brody said.

“If you took out an insurance policy and there was some kind of misrepresentation, or if it was a policy that would never cover you, there is probably a claim to recover your premiums because the policy was effectively junk.”

Mr Brody said he would encourage the insurance industry to ‘look at the fairness of what they are doing and come up with a better solution for their customers’.

Food truck leads to insurance termination

Dean and Caroline McLaren paid $4,500 a year in premiums with CGU, owned by Insurance Australia Group, for home and contents insurance for their regional Victorian home for 20 years.

Last week, Mr McLaren was also told his policy would be canceled immediately as the food truck the couple had operated for five years was registered at their home.

A woman wearing a brightly colored apron in front of a black and yellow food truck.
Caroline McLaren discovered that registering her food truck at her regional home in Victoria voided her insurance policy.(Provided)

“We weren’t trying to claim the food truck at all, we have separate commercial insurance for that,” he said.

“It wasn’t something we tried to hide. It never occurred to me to tell them.”

A CGU spokesperson said the company’s policy was “not designed for customers who run a home-based business, for example, commercial cooking in the home kitchen, where there may be a increased risk of accident due to the work undertaken”.

They said customers were required to let the company know if there were any changes that would “impact the range of risks on their property, such as running a home-based business” and that it informed “customers of this requirement and its importance when entering into a contract and when receiving their contract renewal documents”.

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