Domestic violence survivor calls for change to insurance contracts

Expert urges more insurers to introduce Conduct of Others clause

Domestic violence survivor calls for change to insurance contracts

Insurance News

By Daniel Wood

“This is a terrible situation but unfortunately not an unusual one,” said Catherine Fitzpatrick. “Victim-survivors are being penalised for the actions of perpetrators which compounds both their financial and emotional distress.”

Fitzpatrick, adjunct associate Professor at UNSW’s School of Social Sciences, recently authored a report that looked at how to make the Insurance Contracts Act 1984 (IC Act) safer for women.

Insurance Business reached out to her for comment after a victim of domestic abuse contacted IB after reading Violence against women is increasing – what can insurers do?

“I don’t want this to happen to someone else,” said Anna (not her real name). “I want insurance policies to consider domestic violence.”

After many months of violent abuse - including sexual assaults and a broken limb - Anna first moved her children from her ex-partner’s home and recently followed them.  She said she is now safe with a friend.

But Anna left everything behind, including her car. Many belongings, she said, are now damaged or missing. Anna did have a home contents policy with RAC insurance. She claimed for about $40,000.

“That’s why I took it out,” she said. “I thought if things go bad it would help.”

However, on the basis of an exclusion that’s also used by more than 85 other insurers in Australia, RAC refused her claim.

Conduct of Others clause 

“Insurance should provide financial protection, but the common malicious damage exclusion leaves women shouldering the burden of paying for damaged or destroyed assets through no fault of their own,” said Fitzpatrick. “I urge all insurers to introduce a Conduct of Others clause that provides flexibility to pay a claim that would ordinarily be declined.”

Fitzpatrick said only Allianz, the NRMA and Suncorp have a Conduct of Others clause in their policies.

“It shouldn’t be a lottery for a customer to receive this help based on who they are insured with,” she said.

Anna told IB that this week she pulled out of a complaints process with the Australian Financial Complaints Authority (AFCA) because her mental health was suffering.

“My boys need a mum, that’s why I’m pulling out,” she said. “I really do wish that people had been honest with me through this whole process – it’s very cruel.”

She was referring to how both RAC and later AFCA employees, sometimes with the very best intentions, had inadvertently added to her trauma.

A traumatic claims process

After initially refusing her claim, she said (supported by documents seen by IB) RAC agreed to consider it ex gratia. The firm asked her to provide evidence for the loss to substantiate this payment.

This was traumatising and potentially dangerous for her, she said. There was no safe way for her to provide sufficient evidence. She would either need to return to her old home or retrieve belongings through a third party. In the process, she said, she risked a violent response from her ex-partner.

A removalist firm ended up retrieving some belongings and her ex returned others, she said, but most were damaged or of no value.

This process also required her to give evidence to an RAC loss adjuster. Anna said she requested a female loss adjuster but a male turned up (RAC contends they only received this request for a female afterwards). This process obliged her, she said, to detail violent abuse in order to explain her damaged and missing property.

“They breached their own domestic violence policy,” said Anna. She referred to RAC’s Family Violence support webpage.

Section 54.5 of the Insurance Act

Anna also did some research that she sent to RAC.

“I found section 54.5 (a) and (b) of the Insurance Act and realised that I should not have had my claim declined based on the fact I was doing everything based on my safety and leaving the home and not contacting my abuser,” she said.

This section can be read here. RAC asked for an extension, she said, to seek legal advice about the implications.

She said the firm ended up rejecting her claim on the basis of the original exclusion clause. However, RAC offered a payment of $5,000 as “a gesture of goodwill” which Anna rejected.

IB reached out to RAC. A spokesperson said RAC “is unable to comment on individual member policies or claims, due to privacy.”

The spokesperson said where a member is involved in a vulnerable situation “RAC will facilitate the appropriate welfare checks with the relevant authorities as appropriate.” 

Anna appealed to AFCA but said this agency also asked her to provide evidence. Anna said she was led to believe a ruling of some kind would come last week and, given her fragile mental health, the waiting was very stressful.

“These false promises are like you are still in the abusive relationship – they act as triggers,” she said.

Anna said she has changed over her home contents coverage to another insurer because their policy has a Conduct Others clause.

IB has reached out to the Insurance Council of Australia (ICA) for comment.

What do you think of the Conduct of Others clause? Should all insurers adopt it? Please tell us your view below

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