Undisclosed Religious Meetings Result in Denied Theft Claim for Landlord

The landlord had insured a building leased to a restaurant. However, the upper floor was occasionally used by a religious organization for weekly meetings, a detail not disclosed to AIG during the policy's renewal in June 2023. In 2023, a theft occurred, resulting in a claim of $99,295. AIG declined the claim, stating that the undisclosed use of the property constituted a breach of the duty of disclosure.

AFCA reviewed the case and found that AIG had updated its underwriting guidelines in May 2023, categorizing religious institutions as 'outside appetite' due to increased fire risks associated with arson attacks. Had the landlord disclosed the property's actual use, AIG would not have renewed the policy. Therefore, AFCA concluded that AIG was entitled to reduce its liability to nil and decline the claim.

This ruling serves as a crucial reminder for property owners and landlords to provide complete and accurate information about property usage when obtaining or renewing insurance policies. Failure to disclose all relevant details can lead to denied claims and significant financial losses. Engaging in open communication with insurers and understanding policy requirements are essential steps in securing appropriate coverage and ensuring claims are honored when incidents occur.