Today, thousands of home and contents insurance policies of Australians running parallel business activities from home have been rendered invalid and it’s distressful; but then, what if one has a home office they are operating from?
After hearing from a family that suffered loss when their property in Landsborough got damaged during a severe hail storm this year, it was challenging to assist after discovering that their insurer voided their home insurance policy citing their sideline furniture repair business was run from home.
After the Landsborough family’s case, hundreds of Aussies have emerged, sharing disturbing stories of how their insurance policies were cancelled because they operated a business activity from their property.
As business owners got rattled by the new revelations, folks working from the comfort of their homes were left perplexed and with more questions than answers.
The good news is that if you’re working from the comfort of your home for your employer, consider yourself safe.
However, if your ABN is registered under your current address, then you may consider contacting your insurance company or checking your insurance policy’s details.
Working from home office - not a big deal,
operating a business from home - watch out
While most insurers don’t consider working from home office a risk, it’s good for business operators to check again.
According to Hayriye Uluca, a senior lawyer at Maurice Blackburn Lawyers, people need to understand that there’s a difference between working for your employer from your home and operating a business activity from your home.
When working for your employer, you won’t engage in what your insurance company might consider as a business undertaking.
It’s different from stating that you are operating a business activity for which you registered an ABN.
When a policyholder signs on the dotted line to have a home insurance cover, an insurer usually asks several questions including whether the business is taking place on your property. When your answer is yes, then the insurance company will make arrangement to have the business inspected and the risk involved determined.
Ms Uluca noted that it’s impossible to know with certainty the activities that insurance companies regard as low or high risk.
As such, even if the business you operate from home involves just sitting down from behind your PC, Ms Uluca recommends confirming with your insurer to ensure your home and contents policy is valid and in case of the worst, they’ve got you covered.
Lately, insurance companies offering home and contents insurance have started taking issue with policy holders who have started side hustles or are undertaking business activities from similar addresses.
“Consumers should really be alert to this.”
In a statement, Philippa Heir, managing lawyer at the Consumer Action Law Centre noted that working from a home office, even if you are the business owner, would probably attract a fine.
It’s obvious that insurers have evolved with times and taking into account the new normal that has compelled more people to work from their properties.
Insurance companies are not willing to cover home offices they consider risky.
But, Ms Heir issued a warning that each insurance provider has a different way of sorting out these kinds of things and policyholders should stay abreast with the new developments in the insurance sector and consult their insurer on any changes.
Ways to avoid risking your home insurance?
Ms Heir urged Australians to take note and answer all questions asked by the insurer honestly and correctly.
When taking out an insurance policy or renewing it, you owe it to yourself to be reasonably careful not to make any misrepresentation to your insurer.
Failure to exercise transparency can compel your insurer to render your policy null and void, though the insurance company is obligated to prove that the details you excluded were crucial.
Ms Uluca added that if your insurance company states that they declined your request to be insured because of the business activity undertaken from home, they owe you an explanation.
The Insurance Council of Australia (ICA) has laid emphasis on the need to be honest with your insurer about your business activities on your property.
When you purchase or renew insurance your insurer will ask you to disclose a range of information relevant to the policy including whether any business or commercial activity, no matter the size or type, will be conducted at the property,
Jordan Callender, Insurance Claims Group
What happens when there’s a dispute involving my insurance company?
In case your insurer declines to honour your home insurance claim, Ms Uluca advised that you can start by filing an internal complaint with your insurer.
The insurance company is expected to respond to your complaint within a period of 30 days.
If their response is not satisfactory or the company fails to respond within the required timeframe, you may consider escalating your complaint to the Australian Financial Complaints Authority.