The case involved a restaurant that secured coverage from QBE Insurance for its leased premises. On August 2 of the previous year, an arson attack resulted in significant damage, leading the restaurant to file a claim. However, QBE declined the claim upon discovering that the sole director had not disclosed prior criminal convictions during the policy application process.
The director contended that the omission was unintentional and emphasised his efforts towards rehabilitation. He argued that this oversight should not impact the validity of the claim and even offered to pay any additional premiums that might have been applicable had his criminal history been disclosed.
QBE maintained that, had they been aware of the director's convictions, they would not have provided coverage. However, AFCA noted that the insurer failed to provide concrete evidence of the specific questions asked during the policy's inception. The broker utilised an electronic platform linked to QBE's systems, but the insurer did not furnish screenshots or detailed records of the application process.
AFCA highlighted that the responsibility to demonstrate non-disclosure lies with the insurer. Without clear evidence of the questions posed and the information provided, it becomes challenging to substantiate claims of non-disclosure. Additionally, AFCA pointed out that one of the potential questions might have inquired whether "the insured" had been convicted of a criminal offence. In this context, "the insured" referred to the company, which had no criminal record, thereby complicating the interpretation.
This ruling serves as a crucial reminder for restaurant and café owners about the significance of full disclosure when obtaining insurance coverage. Non-disclosure, even if unintentional, can lead to disputes and potential claim denials. To mitigate such risks, business owners should:
- Ensure all relevant personal and business information is accurately disclosed during the insurance application process.
- Maintain open communication with brokers and insurers to clarify any uncertainties.
- Regularly review and update insurance policies to reflect any changes in business operations or personal circumstances.
By adhering to these practices, restaurant owners can better safeguard their businesses against unforeseen events and ensure that their insurance coverage remains valid and effective.
