Man with 14 criminal offences loses house fire claim dispute

A man who admitted to his insurer “I spat on a copper” while failing to disclose 13 other criminal offences relating to assault, property damage and drugs has been unsuccessful in efforts to have a claim for fire damage to his property accepted.

In the 10 years before his home and contents policy with Commonwealth Insurance was renewed in July 2019, he was found guilty of 14 charges related to producing dangerous drugs, unlawful assault, assaulting police, repeatedly contravening a Family Violence Intervention Order and intentionally damaging property.

The man lodged his claim after the January 2020 fire. The insurer denied it on the basis of non-disclosure.

The Australian Financial Complaints Authority (AFCA) said the insurer’s renewal notice had adequately explained the duty of disclosure and that if he had made known all the offences the insurer asked about, it would not have agreed to renew the policy in July 2019 and would not have been ‘on risk’ at the time of the fire the following January.

The man disclosed that he was charged with assault in 2015 when the policy was incepted in 2017, but not that he had also been found guilty of several other offences in the previous decade.

“The complainant had a duty to inform the insurer (at renewal) that his previous disclosure was incomplete,” AFCA said. “The insurer informed the man of his duty of disclosure and asked him about his criminal history, in the way the law requires. Therefore, it is fair for the insurer to rely on the man’s non-disclosure of his criminal history to deny his claim.”

AFCA said the insurer was only required to establish the man breached his duty of disclosure when the policy was renewed, though it instructed Commonwealth Insurance to refund all premiums paid for the policy since it was first issued.

“I am satisfied that the complainant knew about the undisclosed convictions, and knew (or should have known) that they were relevant to the insurer’s decision to offer insurance,” AFCA’s ombudsman said. “The man had been found guilty of numerous criminal offences.”

A renewal notice included a copy of information previously disclosed to the insurer and asked the man to tell the insurer about any change.

“If you, or anyone else covered by this policy, have been charged with a criminal offence in the last 10 years … you must tell us immediately,” it said.

Not long before renewal, the man was found guilty of an offence relating to drugs.

“This is one of the types of offences the insurer asked about,” AFCA said. “The man had a duty to disclose this before the policy was renewed. The man should have known undisclosed offences were relevant.”

In 2017, the homeowner had a telephone conversation with the Commonwealth Bank about topping up his home loan and was told that required the building to be insured. He said he doubted he could get insurance because of his criminal history and had been refused insurance in the past because of his record, though he agreed to apply through Commonwealth Insurance.

The insurer’s employee read out a statement explaining the duty of disclosure, and asked “for criminal history: In the last ten years, have you or anyone else to be covered by this policy been charged with or found guilty of a criminal offence?”

The man answered yes. He was then asked if any offence related to fraud or dishonesty, theft or robbery, arson, damage or threaten damage to property, injured or threatened injured to persons, drugs or stolen goods.

He answered “Yeah. No. Injury to persons.”

He was transferred to another employee in the insurer’s underwriting department and he confirmed he had a criminal history. Asked what “the charge” was for, he said “I spat on a copper”.

Asked what the penalty was he said “community work” but he could not remember the month and year the offence occurred and promised to find out and call the insurer back. He later spoke to a different employee and stated he had an assault charge and it went to court in May 2015. The insurer asked some more questions about the offence but did not ask whether the man had been charged with any other offences in the previous 10 years.

“The man knew his criminal record was relevant to insurers,” AFCA said.

“The man disclosed one offence involving injury or threatened injury. This offence, by itself, did not put him outside the insurer’s underwriting guidelines. However, the other offences he was found guilty of in the previous 10 years put him outside the insurer’s underwriting guidelines,” the ruling said.

See the full ruling here.