Lauren Arnett was cooking dinner on a Sunday night last year in the kitchen of the rental property she shared with her partner.
- GIO sues couple for nearly $ 80,000 over what the couple say was an accidental fire in their rental
- Consumer protection groups say it’s part of a larger trend in the insurance industry
- They call on Australia to introduce legislation used in New Zealand
In seconds, her relaxed Sunday night went up in smoke – literally.
“I was preparing [dinner] and I just had oil on the stove, ”she said.
“It was like some kind of sturdy electric hob, which meant it was hard to know how much heat was coming out of it.
“I called Luke and I asked him, ‘How hot do you think this is?’
“And while we were finding out, it caught fire.”
She and her partner Luke Sierakowski desperately tried to put out the flames and immediately called the fire department at their home in Horsham, west Victoria.
They were able to get out safely, and the quick work of the firefighters limited most of the damage to the exhaust fan and to the ceiling above the stove.
“Once outside, there was smoke everywhere and it looked like it would burn most of the house down, but it wasn’t,” Sierakowski said.
The couple say there have been only limited inquiries from the insurer as to the cause of the fire, with an appraiser coming to “take pictures.”
“Nobody really spoke to us, ”Sierakowski said.
The couple put the experience behind them and stayed with friends until they found a new rental property.
Eventually, they decided to buy their own house.
But in June of this year, 10 months after the fire, they received a letter from the insurer GIO.
He said it was the rental property owner’s insurer who had the kitchen fire.
“The circumstances reported indicate liability on your part and we intend to recover the cost of the repairs,” the letter said.
“Documents supporting the amount of our loss, at $ 77,845.00, are attached.
“Please send payment to GIO by July 14, 2021.”
Ms Arnett said the amount of money demanded by the insurer would financially “ruin” the couple.
“I think almost all consumers would have no idea this could happen to them.“
Suncorp, GIO’s parent company, released a statement after being contacted by ABC.
“We encourage tenants to call us as soon as possible to provide us with some details as we believe we can resolve this complaint quickly, including the ability to reduce or waive costs,” a spokesperson said.
Choice files complaints with regulators
Consumer group Choice and suburban legal service WEstjustice are alarmed at the number of cases similar to the Horsham couple.
WEstjustice attorney Matthew Martin said he has seen cases of homeowner insurers claiming tenants up to $ 300,000 for accidental damage to property.
“In the past year alone, we’ve seen over 10 cases of tenants sued by homeowner insurers,” said Martin.
“That’s a pretty large number for a rental clinic that only serves the western suburbs of Melbourne.
“So I can only imagine how many digits there are across the country.”
Choice campaigns director Erin Turner said that in the cases she saw, insurers failed to do the job to prove the tenant actually owed the money.
Ms Turner said sometimes insurance companies would send out invoices several months or years after the damage occurred.
“They have to prove that if they send you an invoice, especially an invoice for tens of thousands or hundreds of thousands of dollars, you really owe what you are being asked to pay.
“Instead, what these insurers seem to do is issue a bill hoping some people pay and just see what they can get.
Choice has filed complaints about this behavior with the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC).
“What we would like to see insurers do is confirm that they will not prosecute people who rent for accidental or unintentional damage,” said Ms. Turner.
“They should have clear policies and procedures in place to treat people fairly and make it very clear if you owe an invoice, why, at least.”
The New Zealand system
Ms Turner said New Zealand had “a very clear system” and laws in place to protect tenants from claims by homeowner insurers.
“People who rent cannot be sued for unintentional damages,” she said.
“They can be sued for malicious or intentional damage, which I think is fair enough.
“But that means if you rent, you don’t end up having to pay hundreds of thousands of dollars.”
Choice has also written to the Insurance Council of Australia to raise the issue.
“We are carefully considering the matter in consultation with our members who have specialized expertise in this area,” said a spokesperson for the board.
The Insurance Council said the new industry code of practice, which it introduced in July, sets standards of openness, fairness and honesty in all their dealings with consumers and that it could impose sanctions.
Regulators “take into account” the problems
The ACCC confirmed that it received a copy of Choice’s complaint.
“The issues that Choice has identified raise broad issues in insurance, leasing, real estate law and dispute resolution procedures,” said an ACCC spokesperson.
“The ACCC will also consider whether the issues raise concerns under Australian Consumer Law.”
The Australian Securities and Investments Commission said it has met with Choice and is also looking into the matter.
“We are also in discussions with other regulators about the issue, as it raises broader questions regarding property and tenancy law and Australian consumer law.”
Erin Turner of Choice conceded that this was a “complex” area of law, spanning state and territory rental laws or property laws, which overlapped with federal insurance laws.
“But if we think about reform, there are a lot of different ways of doing it,” she said.
Ms. Turner suggested that changes to federal insurance laws may be needed.
“At the end of the day, this practice is not about landlords (and) tenants,” she said.
“But in the meantime, I think there are laws we can consider enforcing to force insurers to do better and insurers themselves can commit to higher standards.”