Insurers targeting people who rent with unjust bills over $300,000

CHOICE and WEstJustice have called for regulatory intervention to stop insurance companies unfairly pursuing people who rent for claims made on landlord insurance. 

This is a CHOICE and WEstJustice media statement, originally published on 6th August, 2021. Read the full investigation.

The advocacy groups have presented finance regulator ASIC with evidence of insurers pursuing debts from people who rent after a claim is made on landlord insurance, with little or no evidence that the renter is responsible for any damage. 

The cases the groups presented to ASIC include:

  •  GIO insurance demanding payment of over $300,000 for fire damage without proving that the person who rented was responsible. The person and their family were not home at the time of the fire. The demand for payment was sent two and a half years after the fire.
  • Chubb insurance pursuing a person who rents for over $3,600 after a lock failure saw her trapped on the balcony of her high rise apartment. The damage occurred after the property manager told her to call the fire brigade for rescue due to the faulty lock. State rental law is clear that owners are responsible for maintenance of locks. 
  • QBE pursuing a person who rents for more than $183,000 for fire damage, presenting no evidence of liability. 

CHOICE and WEstjustice have asked ASIC to investigate industry practices across landlord insurance and to assess where insurers have misled people or breached licensee obligations to act efficiently, honestly and fairly. 

CHOICE and WEstjustice recommend contacting legal aid in your state or a community legal centre for assistance if you are being asked to pay for accidental rental damage by an insurance company.

Quotes attributable to Matthew Martin, Acting Legal Director, WEstjustice

“No one should receive a bill for a debt they don’t owe, especially a bill as large as $300,000.” 

“We have seen ten cases in our clinic in just the last year where insurers have been pursuing renters for debts they are very unlikely to owe. Given our legal clinic only services the western suburbs of Melbourne, I can only imagine how many people who rent are affected nationally.”

“It appears that insurers are hoping that renters won’t research their rights and just pay up. We need to know how many times insurers have unfairly and unjustly pursued these debts across Australia.” 

Quotes attributable to Erin Turner, Director of Campaigns, CHOICE 

“These practices fail the basic standard of fairness. Insurers sending an unexplained bill for hundreds of thousands of dollars is a nightmare for anyone on the receiving end. Insurers are taking advantage of people when they try to recoup costs without doing the most basic due-diligence to see if the debt is legitimate.” 

“When CHOICE or Westjustice approached insurers about these cases, some insurers dropped the claim. This is a clear sign that they should never have sent the demand in the first place. The cases coming through legal centres are just the tip of the iceberg. We need insurers to come clean about their systems and billing practices.” 

“Insurers have to be accountable when demanding money. We want to see insurers publicly commit to not pursuing people who rent for unintentional or accidental damage. We need to know what systems insurers have in place to make sure no one is hounded for debt they don’t owe. People who rent deserve to feel secure and comfortable in their home, and shouldn’t have to worry about paying huge amounts of money for damages they are not responsible for.” 

Enjoy this article? Sign up to our monthly newsletter and stay up to date on the latest consumer policy news.