Industry responds after reports focus on 'side hustle' policy issues

Insurers have responded to media reports of home and contents policies being cancelled or claims denied on grounds that clients were running income-generating side businesses or hobbies from their properties.

In some of cases mentioned in the ABC News articles, consumers say they were informed by their insurers that their policies would be cancelled because of the risk involved.

Major personal lines insurers Suncorp and Allianz have explained their approach for underwriting home and contents risks.

“It is important our customers have the correct cover for their property – and we encourage anyone who is unsure to contact us so we can clarify their situation and how the policy would apply,” a spokesman for Suncorp brand AAMI told insuranceNEWS.com.au.

“As with all personal insurers, our home insurance policies are underwritten and priced for the risk of a domestic private home.”

The spokesman says when a business is being run out of the home, it could represent a “significantly” different risk.

“For example, a manufacturing or repair business run from home might be a very different risk for fire, equally if valuable stock for a business is being stored at home it could represent an increased risk of theft,” the spokesman said.

“Also, any business that has employees or customers coming to the home would attract a risk for liability claims arising from slips and trips – that wouldn’t otherwise occur in the same way on a normal home policy.”

GT Insurance Brokers Director Glenn Thomas says he is concerned over the industry’s approach as he has some clients whose home and contents insurance applications have been rejected because they make a small income from hobbies.

He says one of his customers, an 80-year-old-pensioner who sells the extra eggs he gets from his chickens to his carer, decided to stop doing so after his insurer said his policy would be cancelled if he continued with the activity.

The pensioner makes $5 from selling the five eggs to his carer and used the proceeds to buy chicken feed, he said.

“I genuinely believe that insurers are wanting to protect their customers,” Mr Thomas said. “But it begs the question ‘what happens if a consumer sells their kids’ clothes on Facebook Marketplace or Ebay on a regular basis?’.”

He says the issue “further emphasises the complexity of insurance even for what is deemed to be a simple home and contents policy and that clients should contact a professional insurance broker to assist them through what may be a tricky process”.

An Allianz spokesman says the insurer relies on the “accuracy and honesty” of policyholder responses to ensure correct insurance cover for their circumstances.

“Regardless of the type of cover, policyholders are required to meet disclosure obligations when obtaining, changing or renewing insurance cover,” the spokesman said.

“To do this, Allianz encourages policyholders to answer all questions as accurately as possible. If unsure about questions or any details, Allianz encourages customers to call us to confirm they are covered and that the most appropriate insurance cover is obtained.”

Consumer Action Law Centre Managing Lawyer Philippa Heir says side hustles are becoming more common and with cost of living pressure going up, people will try to increase their income through these activities.

“If someone inadvertently fails to let an insurer know about something apparently inconsequential, this might not constitute a breach of this duty,” she said, referring to the revised statutory duty on consumers that they exercise reasonable care not to misrepresent.

“In fact, this is the very basis of the revised duty. Insurers also need clear evidence that they wouldn’t have taken the consumer on at all, if they want to avoid the policy.”