Thousands of Australians may be taking out home and contents insurance policies that aren’t valid because they run side businesses from home, but what if you work from a home office?
The ABC spoke to a Victorian family who lost their house in a fire had their home insurance voided because they operated a hobby farmgate egg operation from their property.
Since then, more people have come forward with their own stories of having their insurance cancelled because of their home businesses.
While the revelations had business owners rattled, those working from home had questions too.
The news for the those workers is good: if you work from home for an employer, you’re probably safe.
But if you have an ABN registered to your address, you might want to contact your insurer or check your policy documents.
Working from home not an issue, but business operators beware
Hayriye Uluca, a principal lawyer at Maurice Blackburn Lawyers, said there was a difference between working from home for your employer and running a business from home.
“If you’re working for an employer, you’re not usually going to be engaging in what the insurer might regard as business activity,” she said.
“That’s different if say you are running a business for which you’ve registered an ABN.”
When the consumer’s signing up to get home insurance, the insurer will ask a series of questions such as whether business activity is occurring at the property. It will then assess the level of risk involved.
Ms Uluca said it was impossible to say what activity insurers would consider high or low risk.
“Every insurer differs in terms of the products they offer and the risk they’re prepared to take on,” she said.
So even if you run a business from home that just involves you sitting at a computer at your desk, Ms Uluca advised checking your policy or asking your insurer if this could affect your home and contents insurance just in case.
“We are discovering that home and contents insurers are taking issue with people who have commenced a side hustle or have started to undertake any of their business activity at the same address,” she said.
“Consumers should be really alert to this.”
Philippa Heir, managing lawyer at the Consumer Action Law Centre, said those working from home offices – even if it’s your own business – were probably fine.
“Insurers generally have moved with the times in terms of people working from home,” she said.
“Insurers will often not take into account home offices as a risk that they’re not willing to insure.”
However, Ms Heir did warn that “each insurer approaches these sorts of things differently” and consumers should always check with their company.
How can I avoid risking my home insurance?
Ms Heir advised consumers to take care to answer all the insurers’ questions correctly.
“When you take out insurance or renew your insurance, you do have this duty to take reasonable care not to misrepresent to the insurer,” she said.
Failing to do so can result in your insurance being voided, but the insurer needs to prove the information you didn’t declare was important.
“In order to decline a claim down the track, they have to show that they wouldn’t have offered you any cover had they known of the particular circumstances of the business,” she said.
Ms Uluca said if your insurer says they don’t want to insure you because you undertake business activity at home, it’s fair to ask for an explanation as to why.
The Insurance Council of Australia also emphasised the importance of telling your insurer about any business activity happening at your home.
“When you purchase or renew insurance your insurer will ask you to disclose a range of information relevant to the policy including whether any business or commercial activity, no matter the size or type will be conducted at the property,” a spokesperson said.
What if you have a dispute with your insurer?
If you end up in a situation where your home insurance claim has been rejected by your insurer, Ms Uluca said you should first lodge an internal complaint with the company.
The company is required to respond within 30 days.
If you’re unsatisfied with their response or they they don’t respond in that time frame, you may want to look at lodging a complaint with the Australian Financial Complaints Authority.
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