Canberrans whose assets were damaged during the devastating hailstorm last year have joined a national legal body calling for urgent insurance reforms after new research found vulnerable Australians facing extreme weather events are being left to fail.
The Financial Rights Legal Centre, which provides free and independent legal advice, on July 7 released findings from an 18-month study showing that good consumer experiences were far from universal.
They found the top five issues were poor handling claims, low-ball cash settlement offers, over reliance on defect clauses, under insurance and maintenance issues.
The last issue included being denied coverage on the lack of maintenance on a building when the weather event was of such a magnitude that any amount of maintenance would have been insufficient to prevent the damage.
The report findings are based on the experiences of more than 700 clients impacted by extreme weather events between November 2019 and April 2021 - from the hailstorm to the Black Summer bushfire and Cyclone Seroja.
Dunlop resident Jamelle Boettcher had her Mitsubishi Pajero and Toyota Yaris damaged during the January 2020 hailstorm and said the main issue she faced was the lack of communication and transparency from her insurance company.
Ms Boettcher said both her vehicles were written off despite having only cosmetic damages and spent nearly 12 months dealing with her insurance company before she was able to buy back her Yaris.
"They said they couldn't do it, but I noticed a lot of my friends were able to. I was disappointed and confused because there wasn't an explanation, it was just a response," she said.
"I had a number of conversations with them about buying the Yaris back because it had only a few dints and low kilometres as I bought it one week before the hailstorm.
"I decided to try one more time and at the 11th hour before Christmas, we negotiated figures and they accepted it.
"Just getting straightforward answers would help," she said.
The hailstorm also wreaked havoc across regional Victoria and parts of Sydney and has an estimated damage bill of $1.68b, according to the Insurance Council of Australia.
Of the 132,205 claims, the ACT accounted for about 57 per cent.
Fellow Canberran Jen Bright, whose Mazda 3 was also damaged in the hailstorm, made a formal complaint after feeling "ripped off that there were inconsistencies about the rules".
Ms Bright said that while her car was one of the first to get a quote, she received conflicting advice about whether she could buy it back.
"They said to me that it wasn't an option that they didn't do that," she said.
"Yet I discovered that a number of people I knew with the same company did let them buy back their vehicles, which was very frustrating.
"I rang them and after the complaint, I got some letters that were meaningless, it was too chaotic."
Ms Bright said not being able to buy back cars with cosmetic damages were "a huge environmental waste".
She said she had since departed with the insurance firm and that reforms were needed to improve consistency and transparency of policies.
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Financial Rights Legal Centre's CEO Karen Cox said the centre's insurance law service experienced a surge in calls from people impacted by bushfires, storms, floods and hail during the period of the research.
"Insurers should be better assisting people to identify the appropriate sum insured and basing cash settlement offers on the likely cost to the customer rather than the insurer," she said.
"Governments could be introducing targeted subsidies for vulnerable residents in high risk areas to pay their insurance or mitigate their risk."
Ms Cox also said more data collection was needed in relation to under insurance and on improving general regulation of the sector.
"There are some reforms that have stalled that are really important. For example, common definitions. Many of our clients don't realise that one policy is not equal to another," she said.
"They think they're comparing apples with apples and they get caught out at claims time."
Ms Cox said at the same time demand for services was growing, it was about to cut back the service's hours because of a lack of funding for adequate staff.
An Insurance Council of Australia spokesperson said it noted the research report's finding that "the number of requests for assistance is small compared to the number of claims relating to these catastrophic events" and "insurers often provide vital services to consumers well".
"Since the 2019 bushfires, insurers have paid out more than $5.4b in natural disaster claims," they said.
"Insurers received more than 39,000 claims arising from the bushfires alone, totalling more than $2.3b.
"More than 95 per cent of these claims are now finalised and paid, supporting those communities in their recovery."
"Our members work hard to achieve positive outcomes for customers and strive to do better for those policyholders who, for a range of reasons, were not satisfied with the outcome of their claim."
The spokesperson said there were a number of provisions in the new general insurance Code of Practice covering issues raised in the research report.
