Keith Buckland is one of the Tweed residents who experienced huge premium rises.
Keith Buckland is one of the Tweed residents who experienced huge premium rises.

Homeowners could sue over insurance rip-off

TWEED residents over-charged on their home insurance have the right to take legal action, according to a university expert.

Southern Cross University law professor Geoff Manion believes a class action lawsuit is theoretically possible, but residents who paid overblown insurance premiums due to incorrect flood mapping should first take the issue up with insurers.

"A compelling argument could be mounted along these lines.

"If premiums were calculated based on a risk of flooding that didn't exist, the insurers have therefore unfairly and unconscionably profited as a result of not really being on the level risk for meeting the insured event (ie, flood) that they have represented to their insured," Mr Manion said.

"The insured have been prejudiced as a result of the premiums being excessively high, given that the actual risk of flooding for some properties didn't exist, or was much lower than the maps indicated.

"On that basis either a refund of part of the premiums paid (unlikely) or an offset against future premiums (a better argument in that it may appeal more to insurers) could be a sustainable."

Mr Manion said the insurance industry was not governed by the Competition and Consumer Act 2010, which would have been the easiest path to address miscalculations.

He added that "section 733 of the Local Government Act provides a general indemnity to local government bodies, exempting them from liability". Mr Manion suggests contacting the Financial Ombudsman Service if negotiations with insurers failed.

"Before redress to the Ombudsman is sought it is usually expected that attempts will have been made by the insured person affected by the conduct of the insurer to resolve the problem with the individual insurer directly via their internal dispute resolution mechanisms.

"This is a common theme now with most litigation, so a court action is seen as a last resort."

Banora Point and District Residents Association president John Sweeney said members were "trying to get the issue sorted through the political arena", but that legal or other action was not out of the question.

Murwillumbah Residents and Ratepayers Association president Robyn Lemaire said members were "feeling the pinch" but further action would "depend how much it is going to cost".

Since the Daily News broke the story on inflated home insurance premiums we have had continued reports of premium rises, varying from a few hundred dollars to $8100.

Did your insurance rise? Let us know. Phone 07 5523 6247.

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