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  • Tania King

Insurers now targeting businesses run from home to deny claims.


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The Covid pandemic changed many things and insurance is not immune to the many changes in the new world. One of the most significant changes we saw for business was the massive increase of people working from home. After the lockdowns and social distancing ceased, many businesses had changed the way they operate and discovered huge benefits of no longer paying leases for office space. Some businesses were able to save their money and run from home. This was identified as an increase risk by underwriters and insurers adapted their policy wordings accordingly.


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We have been hearing the rumblings in the insurance market of insurers denying claims if businesses are run from home for months. AFCA has just ruled on a complaint from 14 December 2021. Insurance news has just released an article of an AFCA (Australian Financial Complaints Authority) ruling in favour of the insurer over a business run from home.


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You can read the full AFCA finding by clicking the blue button below

The short version for those that did not read the entire story

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- the insured ran a tanning business from her home, a paying client came to an appointment and opened the door and let her dog out. The dog bit the client and the client took legal action for medical bills and lost work that resulted from the bite.

The insured said the claim should be paid because the client was not invited into the house where the dog was kept. The insurer denied the claim because they were unaware there was a business running from home. According to duty of disclosure the insured should have told them about the business and cover would never have been offered with a home and contents policy because their policy wording excludes business activity run from home

The claim was denied because in their opinion the injury would never have happened if the paying client was not 'invited' onto the property for a tanning appointment.

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"This determination is in favour of the insurer. The insurer is entitled to decline the claim and cancel the policy. The insurer is not required to take any further action under the claim." That was the Determination of AFCA in this case.


Is the insurer entitled to decline the claim?

"Yes. The available information shows the incident giving rise to the claim arose from or is connected to circumstances which are excluded under the policy. It is fair that the insurer be permitted to decline the claim in line with the policy provisions"


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This determination leaves the home owner without cover for the resulting legal battle with her client. She now has to find the money without the assistance of her insurance to cover the bill. AFCA has just set a precedent for all insurers. It is now more important than ever to talk to a broker about your insurance needs. Gone are the days when your thought insurance was simple. Not having an expert advise you can be extremely costly.


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