Better check your cover pronto!
Who knew selling eggs at the garden gate could void your home insurance?
Apparently not many people, including the Victorian homeowners who have found themselves at the center of an insurance nightmare that should prompt everyone with a side hustle to check their coverage.
It seems having an Australian Business Number (ABN) registered to your home address may render your home and contents insurance invalid if you have not declared the business to your insurer. And that applies even if the business is unrelated to any cause of property damage or loss.
Victorian homeowners found out the hard way when an electrical fault sparked a blaze that burned their home to the ground last year. They were stunned when their claim was rejected because their insurer found there was an ABN registered to their address. The company said the couple had not declared they were operating a business from home when they took out insurance, and they would not have offered them cover had they known of this additional risk.
For their part, the couple said they didn't consider it relevant as no part of the business took place in the house and the fire was not related to the business.
The case has been picked up by a no-win, no-fee law firm, and recent reports on the ABC about the dispute have sparked waves of concern, particularly from the many people who have started side gigs during the pandemic.
Know the risks
Consumer law advisers have said home office-based businesses that take up less than 20 per cent of the home's floor space, with no clients coming and going, may not be considered as high risk as operations that:
Use specific or specialised machinery
Engage in activities that may increase the risk of incidents such as property damage, fire, theft ect
Are visited by customers
The Insurance Council of Australia has underlined the importance of declaring any business or commercial activity no matter the size or type, as each insurer assesses risk differently.
It is also worth remembering that people operating a business from home may also need additional small business insurance protection including public liability, product liability and professional indemnity insurance.
Disclaimer: The material and contents provided in this article contains general information and does not take into account your personal objectives, financial situation or needs. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, please contact Peer Wealth on (02) 8014 7608