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Insurers have been playing with fire

Fire is a destructive, costly and traumatic event for any property or business owner but there is nothing more soul destroying than having your insurer wrongly accuse you of arson and denying your claim.

Nearly all insurance policies in Australia exclude cover for fire damage where the fire was lit by the insured. Cover can also be excluded if a fire was lit by a family member or someone that the insured has allowed into their home.

When a catastrophe hits, homeowners and businesses expect their insurer to deliver on their promise to help them get back on their feet after a loss.

Unfortunately for policy holders, some insurers have implemented strategies to maximise their profits by consciously deterring their customers from obtaining their legitimate entitlements. They do this by deliberately "low-balling" or discounting their clients’ insurance claims or denying them altogether. The concerning thing we’re now seeing more and more in house fire claims is for insurers to accuse the policy holder of committing arson and denying their claim as a result.

Strategies like these rely on the fact that many inexperienced claimants will lose heart and drop off should they not have access to the advice or resources they need to stand up against their insurer.

Such strategies go against the principles of trust and faith upon which insurance was once based. Today, instead of paying out in good faith, it appears that some insurance companies want to hang on to your money as long as they can so they can earn more profit from it.

Recently, there has been some good news for property or business owners who have been accused of arson and had their claims denied by their insurer as a result. Up until now, a policy holder accused by their insurer of committing arson was responsible for proving their innocence. For individuals and companies without the resources or expertise to deal with forensic experts or the law, proving the fire was not deliberately lit has often been an insurmountable hurdle.

However, a recent Supreme Court of NSW has finally clarified that the onus of proving arson lies with the insurer, shifting the burden away from the policy holder having to prove that they didn’t cause a particular fire. Although the decision is from a NSW court, it is thought to apply throughout Australia because it is from the NSW Court of Appeal and is well reasoned.

Shine Lawyers has successfully represented policyholders who have had their claims reduced or denied unfairly by their insurers in particular for flood, fire and cyclone claims. For more information on how our Disaster Insurance Recovery team can help you, contact us.


Written by George Newhouse Original image created by Mosmas and issued under the Attribution-ShareAlike 2.5 Generic license.

Written by Shine Lawyers. Last modified: September 26, 2018.

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