A restaurant and takeaway business, insured by QBE, suffered extensive damage due to an arson attack on August 2, 2024. The insurer declined the claim, citing the director's failure to disclose his criminal convictions during the policy's inception.
The director contested this decision, asserting that the omission was unintentional and emphasizing his efforts toward rehabilitation. He offered to pay any additional premiums that would have been applicable had his criminal history been disclosed.
QBE argued that disclosure of the convictions would have led to a refusal to offer insurance. However, AFCA found that the insurer could not provide evidence of the specific questions asked during the policy's inception, as the broker used an electronic platform linked to the insurer's systems, and QBE did not furnish screenshots of the application process.
AFCA noted that one potential question asked whether "the insured" had been convicted of a criminal offence. In this context, "the insured" referred to the company, which had no criminal convictions. The authority concluded that the insurer failed to establish that the director had a duty to disclose his personal criminal history under the circumstances.
Consequently, AFCA determined that QBE could not deny the claim based on non-disclosure and ordered the insurer to reinstate the policy and proceed with settling the claim in accordance with the policy terms and conditions.
This case underscores the importance of clear communication and documentation during the insurance application process. Insurers must ensure that their application procedures explicitly address the disclosure of directors' personal histories to avoid ambiguities. For business owners, this ruling highlights the necessity of understanding disclosure obligations and the potential implications of non-disclosure on insurance claims.
