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Jason approaches Allinsurance for insurance over the house he is renting. He lives in the house, but his partner is moving in as well and will pay for half the rent. This has not been disclosed by Jason in the lease or to the insurance company.

Jason also has a contract to run the University helpdesk (providing IT advice) from home and he intends to undertake the work himself and will commence as soon as he moves in.

a) Under the Insurance Contracts Act 1984 (Cth) what is the duty of disclosure required by Allinsurance and Jason? What must Allinsurance tell/ask? How does Jason work out the information he has to disclose? Include the questions you would expect Allinsurance to ask, explain the effect of the relevant sections of the Act and use at least one case as an illustration in your answer.

b) Assume that Jason doesn't mention to Allinsurance that his partner is paying the rent too or that he will be working from the house.

The only question Jason saw that might have been relevant was ‘do you intend to use the premises for business purposes?' Jason answered ‘no' because he thinks he could run the business anywhere so it's not relevant.

One day Jason finds that someone has broken into the house and stolen his computer and iPhone and caused $4000 damage. He can't meet his contractual obligations because of the missing computer and iPhone and the contract is worth $1000 per day. As well as claiming on the stolen items he files claims with Allinsurance for the damage and for the lost income because he says these relate to the stolen goods.

Allinsurance is refusing to pay because they say Jason hasn't made full disclosure.

Is this correct?

Can Allinsurance reject the whole claim, part of it or none of it? (Refer to ss 28 and 31 of the Insurance Contracts Act 1984 (Cth))

c) Jason's partner dies in a terrible accident crossing the road to borrow some bath crystals. Before she died she turned the bath on and because of her accident no-one discovered this until it had overflowed, causing $5000 of damage. It is also discovered that she is growing drugs in her wardrobe.

Allinsurance is also refusing to cover this damage on the basis that Jason was responsible for illegal activities being carried out in the house. Is this correct?

Does the company have the right to reject the claim?