AAMI denies home insurance claim after couple fails to disclose they sell eggs at their gate

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Justin Uebergang and Verity Metcalfe spend most days cooped up in a two-bedroom unit with their three young daughters — and another due in September — each fighting for some occasional peace and quiet.

To escape one another they walk around their farm property, feed the chickens, and play with their five white Maremma sheepdogs.

It's been nine months since Mr Uebergang found their home engulfed in flames sparked by an electrical fault.

"All our photos, all our clothing, stuff that can't be replaced, books that I got from my nan that I was going to pass onto my girls, all gone," his partner, Ms Metcalfe said.

Luckily, the family was staying in the unit — which was going to be an Airbnb — for the night, while their home was being renovated.

Mr Uebergang paid more than $2,000 a year for five years for home and contents insurance with Suncorp's AAMI, but when he applied for a payout, it was rejected on the grounds he had not disclosed a business he ran on the property.

It was a farm gate stall at the end of the driveway selling free-range eggs using an honesty box.

"The business we were operating was selling a few eggs on the little roadside stall that was $60 or $70 a week," Mr Uebergang said.

A letter from AAMI said the claim could not be accepted "because we would not have insured your client had they told us they were running a business from the property. When a policy is started with us, the questions are required to be answered honestly".

The couple did not believe they had to disclose the business because it was not operated from the house they were insuring.

The chickens that laid the eggs were housed in a shed a few hundred metres from their house and the eggs were sold in a shed at the end of the driveway.

"They've come back to us and said: you've incorrectly answered that, you should have said you operate a business from home," Mr Uebergang said.

In a statement, AAMI said there was a standard set of questions people must answer when buying home insurance online.

"One question is whether a business is operated at the insured address, and if there is and you fail to disclose then it will void your policy," a spokesman said.

A spokesperson from the Australian Securities and Investments Commission (ASIC) said when taking out insurance, consumers needed to take reasonable care not to make a misrepresentation.

They said what constituted "reasonable care" would differ from party to party, and not making a misrepresentation could be affected by the type of questions asked by the insurer, how clearly the insurer informed the consumer of the duty, and any particular characteristics of the consumer the insurer was, or ought to have been, aware of.

The family has spent their remaining savings replacing what was lost in the fire and is borrowing money from friends and family to prepare for when their next child is born.

Seeing no other way through and facing the prospect of selling their farm to stay afloat, they decided to take AAMI to court.

Hayriye Uluca, a principal lawyer from Maurice Blackburn, said AAMI's denial was "not surprising".

"It is disappointing. The insurer is ignoring the important consumer protections that are in place to prevent these irrelevant factors from being relied on to deny the claim," Ms Uluca said.

"We had a royal commission about this type of behaviour and it's really disappointing to see that continue."

Ms Uluca said there was "no part of the hobby egg farm business that caused or contributed to the fire" and she was concerned other home insurance holders might be caught out in a similar way if a natural disaster hit their property.

"It's similar to if you set up a lemonade stand for your children outside your house; if that's considered in the insurer's perspective to be a business and it's not disclosed and you go on to make a home and contents claim, it's possible for that insurer to  ... not pay you after a fire, a flood or a storm event," she said.

"We think that's completely unacceptable."

The couple's message for AAMI is clear.

"Why are you doing this to us?," Ms Uluca asked.

"How can you possibly put us through this just so your bottom line looks better?

"You're destroying a family. We're not a number, we're a family and we're the ones that are suffering because you don't care."

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