Angry insurers hit back at claims they are failing bushfire victims

Four major Australian insurance providers have been hit with claims that they are failing bushfire victims as a result of “confusing, unfair and unclear” fire definitions in their home and contents policies.

CHOICE called out AAMI, Coles, Youi and APIA on Thursday for allegedly misleading Aussies with loopholes or confusing definitions as to what constitutes ‘fire’ damage.

The consumer advocacy group analysed 26 fire and contents policies offered by the major insurers, and claimed to have found issues with 70 per cent of the ‘fire’ definitions used, while a quarter were said to have “major issues”.

“Insurance is meant to give us peace of mind when the worst happens but right now many Australians are paying for insurance cover with loopholes or confusing definitions” CHOICE CEO Alan Kirkland said.

“People deserve certainty from insurers. You may think you’re covered for fire damage but your policy may contain loopholes that mean, for example, you aren’t covered for heat or smoke damage unless your building caught on fire.”

The watchdog accused insurance providers of “reinventing the definition of fire”, which it warns may result in people being inadequately covered for the likes of heat, smoke or soot damage hen the building itself has not caught fire.

“Many people will be checking their insurance coverage based on bushfires this summer. They’ll face a confusing mix of terms and conditions – it is far too hard to figure out what you’re covered for in natural disasters,” Kirkland added.

“We are concerned that major insurers like AAMI, Youi and APIA have sold policies that will allow them to deny some claims.”

However, following the release of CHOICE’s report, the Insurance Council Australia (ICA) hit back at the claims and issued a statement which accused CHOICE of causing “unnecessary fear” among those affected by the recent bushfire crisis, who are already suffering “emotional, financial and physical stress”.

“Household policies are responding appropriately to claims relating to the bushfires,” Campbell Fuller, Head of Communications at ICA, said. “The ICA is also concerned that this ill-advised and poorly timed report may discourage property owners from deciding to be insured, and CHOICE should accept responsibility for those outcomes.”

Fuller also pointed out that no concerns have yet been raised with the ICA about policy wording, adding that CHOICE had not provided any examples of situations where customers had received detrimental claim outcomes.

Starts at 60 previously put together an article on what to do if your home has been affected by the recent bushfire crisis. You can read it here.

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