Undisclosed Tenant Activities Result in Denied Insurance Claim for Landlord
Undisclosed Tenant Activities Result in Denied Insurance Claim for Landlord
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In a recent case, a landlord's failure to disclose a significant change in tenant activities led to the denial of a substantial insurance claim.
The property, initially leased to a restaurant, began hosting weekly religious meetings on its upper floor without informing the insurer, AIG.
This oversight became a pivotal factor when the landlord filed a theft claim amounting to $99,295, which AIG declined due to non-disclosure.
At the inception of the policy in 2019, the premises were insured as a restaurant with wok cooking facilities. However, by 2023, the upper floor was being used for religious gatherings—a change that was not communicated to AIG. This non-disclosure was critical because, in May 2023, AIG updated its underwriting guidelines to classify religious institutions as 'outside appetite' due to increased fire risks associated with arson attacks.
The Australian Financial Complaints Authority (AFCA) reviewed the case and upheld AIG's decision to deny the claim. AFCA emphasized that the landlord's duty of disclosure is fundamental to the insurance contract. By not informing AIG of the change in tenant activities, the landlord breached this duty, justifying the insurer's refusal to cover the theft loss.
This case underscores the importance for property owners to promptly disclose any significant changes in tenant activities to their insurers. Such transparency ensures that the insurance coverage remains valid and that property owners are adequately protected against potential losses.
Published:Sunday, 8th Feb 2026 Source: Paige Estritori
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Whole Life Insurance: A type of life insurance that provides coverage for the insured's entire lifetime, with a savings component that builds cash value.
