Lauren Arnett was preparing dinner on a Sunday evening last year in the kitchen of the rental property she shared with her partner.
- GIO is pursuing a couple for almost $80,000 over what the couple say was an accidental fire in their rental
- Consumer protection groups say it is part of a wider trend in the insurance industry
- They are calling for Australia to introduce legislation used in New Zealand
Within seconds, her relaxed Sunday evening went up in smoke — quite literally.
“I was preparing [dinner] and just had some oil on the stove,” she said.
“It was like an electric kind of solid hob, which meant that it was hard to know how much heat was coming out of it.
“I called Luke over and asked him: ‘how hot do you think this is?’
“And in the process of us figuring that out, it burst into flames.”
She and her partner Luke Sierakowski frantically tried to douse the flames and immediately called the fire brigade to their home in Horsham in western Victoria.
They were able to get out safely, and the quick work of the firefighters meant most of the damage was contained to the exhaust fan and ceiling above the stove.
“Once we were outside, there was smoke everywhere and it looked like it was going to burn most of the house, but it didn’t,” Mr Sierakowski said.
The couple say there were only limited inquiries from the insurer about the cause of the fire, with an assessor coming to “take pictures”.
“No-one really talked to us,” Mr 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 home.
But in June this year, 10 months after the fire, they received a letter from insurer GIO.
It advised it was the insurer for the landlord of the rental property that had the kitchen fire.
“The reported circumstances indicate responsibility on your part and it is our intention to recover the cost of repairs,” the letter said.
“Documents to support the amount of our loss, at $77,845.00 are attached.
“Kindly forward payment to GIO by 14 July 2021.”
Ms Arnett said the amount of money the insurer was demanding would financially “ruin” the couple.
“I think that almost all consumers would have no idea that this could happen to them.“
Suncorp, the parent company of GIO, released a statement after being contacted by the ABC.
“We encourage the tenants to call us as soon as possible to provide us with some details as we believe we can resolve this claim promptly, including the ability to reduce or waive costs,” a spokeswoman said.
Choice lodges complaints with regulators
Consumer group Choice and suburban legal service WEstjustice are alarmed at the number of similar cases to the Horsham couple.
WEstjustice lawyer Matthew Martin said he had seen cases of landlord insurers demanding as much as $300,000 from tenants for accidental damage caused to a property.
“Just in the last year, we’ve seen over 10 cases of renters being pursued by landlord insurers,” Mr Martin said.
“That’s quite a significant number for a tenancy clinic that only services the western suburbs of Melbourne.
“So I can only imagine how many numbers there are across the country.”
Choice campaigns director Erin Turner said in the cases she’d seen insurers hadn’t done the work to prove the tenant actually owed the money.
Ms Turner said sometimes the insurance companies sent bills many months or years after the damage occurred.
“They need to prove that if they’re sending you a bill, particularly a bill for tens of thousands or hundreds of thousands of dollars, that you actually owe what you’re being asked to pay.
“Instead, what these insurers seem to be doing is issuing a bill hoping that some people pay up and just seeing what they can get.
Choice has lodged complaints about the behaviour with the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC).
“What we’d like to see insurers do is confirm that they won’t be pursuing people who rent for accidental or unintentional damage,” Ms Turner said.
“They should have clear policies and procedures in place to treat people fairly and make it really clear if you owe a bill, why, at minimum.”
New Zealand’s system
Ms Turner said New Zealand had “a really clear system” and laws in place to protect renters from landlord insurers making claims.
“People who rent can’t be pursued for unintentional damage,” she said.
“They can be pursued for malicious or intentional damage, which I think is quite fair.
“But it means that if you rent, then you don’t end up on the hook for hundreds of thousands of dollars.”
Choice has also written to the Insurance Council of Australia to raise the issue.
“We are carefully considering the issue in consultation with our members who have specialist expertise in this area,” a spokeswoman for the council said.
The Insurance Council said the industry’s new code of practice, which it introduced in July, set standards for openness, fairness and honesty in all their dealings with consumers and it could impose sanctions.
Regulators ‘consider’ issues
The ACCC confirmed it had received a copy of Choice’s complaint.
“The matters that Choice has identified raise broad issues in relation to insurance, tenancy, property law and dispute resolution procedures,” an ACCC spokeswoman said.
“The ACCC will also consider whether the matters raise concerns under the Australian Consumer Law.”
The Australian Securities and Investments Commission said it had met with Choice and was also considering the issue.
“We are also talking to other regulators about the matter as it raises broader issues in relation to property and tenancy law, and Australian consumer law.”
Choice’s Erin Turner conceded it was a “complex” area of law, covering state and territory rental laws or property laws, that intersected with federal insurance laws.
“But if we’re thinking about reform, there’s a lot of different ways we could do it,” she said.
Ms Turner suggested changes to federal insurance laws may be necessary.
“Ultimately this practice isn’t about landlords (and) it’s not about renters,” she said.
“But in the meantime, I think there are laws that we can look at enforcing to require insurers to do better and insurers themselves can commit to a higher standard.”