An insurance giant is “trying to screw” clients who lost homes in Wye River’s Christmas Day bushfire, federal parliament has heard.
AAMI Insurance was refusing to cover full rebuilding costs for “a number” of policy-holders who should have total coverage, said Corangamite MP Sarah Henderson.
The shortfall could reach $250,000 for some AAMI clients, she told parliament.
Ms Henderson read out promotional material for AAMI’s complete replacement cover.
“If your home is damaged or destroyed by an insured event, we’ll repair or build it no matter the cost to us,” she quoted.
The insurer’s failure to keep its end of the deal was “disgraceful”, she said.
“The problem is AAMI will not rebuild the home itself – the policy does offer this discretion – and it is refusing to provide sufficient money to cover the cost of the rebuild.
“In at least six cases AAMI is underquoting the cost of the rebuild by between an estimated $100,000 and $250,000.
“In a number of cases, AAMI will only reveal the lowest quote to rebuild and refuses to release any funds so policyholders can get architect plans drawn up, which is required for an independent costing.”
AAMI was also using companies without enough local knowledge to satisfy bushfire attack level requirements, Ms Henderson said.
“These companies also carry none of the risk of rebuilding, meaning there are no consequences for them for underquoting or not providing sufficient contingency.”
The insurance stand-off, almost a year after the fire, was forcing owners with mortgages on destroyed homes “to the wall”, Ms Henderson said.
She accused AAMI of “frankly, trying to screw them”.
AAMI was “committed to resolving these claims as a priority”, the company told the Indy.
“AAMI has every sympathy for the Wye River and Separation Creek communities affected by last year’s bushfires.
“We understand this is a stressful situation and we have been working hard to resolve all of the claims as soon as possible.
“Only seven claims” of 63 filed with AAMI were still in negotiation, the company said.
“The majority of AAMI customers at Wye River had purchased the optional Complete Replacement Cover (which) provides full insurance cover, meaning customers cannot be underinsured.
“However, claims under these policies can take slightly longer to settle as there is more work required to ensure the customer’s settlement is the correct amount.”
AAMI also sourced multiple quotes from independent builders to determine replacement and repair costs, the company said.
“We consult closely with our customers throughout this process and negotiate where there are different cost estimates presented.”
