The NRMA has issued a stern warning to homeowners as concerns of "dangerous" stockpiling of fuel begins to sweep across Sydney and the eastern seaboard.
Following the NRMA’s plea for calm amid soaring petrol prices driven by conflict in the Middle East, insurance experts are raising the alarm: your DIY "fuel farm" in the garage could render your home insurance policy void.
NRMA spokesperson Peter Khoury on Monday slammed the trend of panic buying, which has seen queues snake around service stations in Sydney and Melbourne. While the "bowser shock" is hitting wallets, Khoury warned that the move to store fuel in jerry cans and domestic garages is an economic and physical gamble.
“We are hearing troubling reports of people trying to stockpile the fuel at home, which, apart from not making any economic sense, is also extremely dangerous,” Mr. Khoury said. “Please, do not fill jerry cans and put them in your garage because that is unsafe.”
Wholesaler United Petroleum has informed service station buyers that it has suspended normal fuel quotas “across all locations effective immediately”, telling clients that the current uncertainty in oil markets has forced its hand.
Brett Crawford United Petroleum's head of supply and trading said “This measure is being implemented to ensure we maintain an orderly and sustainable supply program during this period of market volatility”.
“The government needs to wake up. Australia is on its knees,” Fuel distributor Bartranz Petroleum said in a social media post. It said it had been allocated just 10 percent of its regular allocation at Brisbane terminals.
For the Australian insurance profession, the risk isn't just the fire-it’s the fine print.
Most standard Home and Contents policies in Australia contain specific limits on the storage of flammable liquids. While a 5-litre tin for the lawnmower is standard, the sudden influx of multiple 20-litre jerry cans represents a significant "material change in risk."
Under the Insurance Contracts Act 1984, policyholders have a duty to inform their insurer of any change that significantly increases the risk of damage to the property. Failure to do so gives insurers a powerful lever to reduce or outright reject claims in the event of a fire.
Industry veterans warn that the volatility of modern petrol, combined with poor storage conditions in hot Australian garages, is a recipe for disaster.
If a fire starts-whether or not it began with the petrol-and the presence of accelerated fuel makes the damage worse, an insurer is going to look very closely at the 'duty of disclosure.
The risk also extends to Third-Party Liability. Should a stockpiled fuel fire spread to a neighbour’s property or cause injury to a bystander, the "gross negligence" of storing excessive flammable liquids could see personal liability claims fall outside the scope of standard coverage.
As West Texas and Brent crude oil break the US$100-a-barrel mark, the temptation to "lock in" current prices is high. However, for the insurance industry, the message to clients is clear: the cents saved at the bowser aren't worth the hundreds of thousands of dollars risked in a denied claim.
