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Major insurers failing Australians with confusing “fire” cover: CHOICE

Over 70% of home and contents policies analysed by CHOICE have confusing, unfair or unclear “fire” definitions.

Major insurers AAMI, Coles, Youi and APIA have been called out by consumer advocate CHOICE for confusing, unfair or unclear "fire" definitions in their home and contents policies. 

The CHOICE analysis of 26 major home and contents policies found problems with 70% of the "fire" definitions in policies and 25% of policies with major issues. 

"Insurance is meant to give us peace of mind when the worst happens but right now many Australians are paying for insurance cover with loopholes or confusing definitions," says CHOICE CEO Alan Kirkland. 

"People deserve certainty from insurers. You may think you're covered for fire damage but your policy may contain loopholes that mean, for example, you aren't covered for heat or smoke damage unless your building caught on fire."

"Many people will be checking their insurance coverage based on bushfires this summer. They'll face a confusing mix of terms and conditions - it is far too hard to figure out what you're covered for in natural disasters," says Mr Kirkland. 

"While we hope that insurers will ensure that claims from this summer's bushfires are determined promptly and fairly, we are concerned that major insurers like AAMI, Youi and APIA have sold policies that will allow them to deny some claims." 

CHOICE experts have revealed some of the worst examples of insurance companies reinventing the definition of "fire" which could be relied on to deny bushfire claims.

Examples of common fire exclusions: 

- Heat, soot, smoke or ash, unless your buildings or contents have caught on fire.

- Heat, ash, soot and smoke when the building has not caught on fire unless it is caused by a burning building within 10 metres of the insured address.

- A number of insurers fail to define "fire" in their policies making their exclusions unclear. 

After issues with claims following the 2011 floods, insurers were forced to use a standard definition of flood, but this only happened after the government intervened in response to overwhelming public pressure.

"A standard definition of "fire" will make it easier for people to compare insurance policies and have certainty that they'll be covered when they need."

CHOICE is calling on the Government to: 

- Mandate a standard definition of "fire". 

- Progress reform to introduce standard terms for all major events in insurance contracts. 

- Ban unfair contract terms in insurance by passing the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Bill 2019 

CHOICE's full analysis of terms and conditions is available

Graphics, photo and video content available via Dropbox: 

Media contact: Jim Hook, 0430 172 669,