Insurer Penalized for Mishandling Storm Damage Claim

1

The homeowner reported his damages following severe storms that hit in February 2022. The insurance company consulted a builder, referred to as PB, to evaluate the property damages.

PB's assessment claimed that the home had pre-existing damage and lacked waterproof integrity. Specific issues highlighted included clogged gutters, cracked and missing roof tiles, and an unconventional roofing method that permitted water intrusion.

According to PB, the storm did not directly damage the roof but worsened existing issues. This led Auto & General to deny the claim and revoke the policy in October 2022, accusing the homeowner of misrepresenting the property's condition as "good" when the policy began and during its renewal.

The homeowner contested the insurer’s stance, arguing that it was unjust. He presented a separate builder’s report, along with written statements and photographs, which demonstrated a lack of prior wall or ceiling damage.

The policyholder attributed the defects cited by PB to partial make-safe work, asserting that the gutters had been regularly maintained prior to the storm. He also mentioned the emergence of storm-induced mold in sections of his home.

While Auto & General did ultimately reverse its initial claim denial and arrange for a cash settlement the preceding October, the Australian Financial Complaints Authority (AFCA) has decreed that the company must retract its claims of disclosure breach and issue a formal apology.

The AFCA identified “multiple erroneous assertions by PB alleging the complainant had neglected to maintain the property appropriately before the storm,” for which the homeowner provided contradicting proof.

The authority’s ombudsman commented, "I am satisfied the complainant reasonably believed that his home was in good condition and waterproof at the time of policy renewal in July 2021. Moreover, I think a reasonable person would agree with the complainant’s evaluation of his home's condition."

They further stated, "I conclude that the complainant did not misrepresent the property's state. Thus, the insurer made a mistake in deciding to cancel the policy."

The insurer has been directed to pay $2000 to cover non-financial losses due to its oversight in investigating the homeowner’s challenges to PB’s report, failure to acknowledge present mould, and incomplete make-safe actions.

The AFCA concluded that Auto & General should have sought a second, independent evaluation of PB’s findings. The resultant protracted claim process subjected the policyholder and his family to undue stress and anxiety.

The original source of this matter was reported by the Insurance News.

Published:Thursday, 23rd Jan 2025
Source: Paige Estritori

Share this news item:

Insurance News

Clear

ASIC Challenges Federal Court's 'Fair Term' Ruling 09 Jul 2025: Paige Estritori The Australian Securities and Investments Commission (ASIC) is appealing a Federal Court decision regarding the wording of a 'pre-existing condition' clause in certain HCF Life insurance products. The court previously determined that while the wording had the potential to mislead consumers, it did not constitute an unfair contract term under the current laws set out in the ASIC Act 2001. - read more

ICA Advocates for Strata Law Reform in the ACT to Enhance Building Management 08 Jul 2025: Paige Estritori The Insurance Council of Australia (ICA) is urging the Australian Capital Territory (ACT) to adopt strata transparency regulations, aiming to enhance oversight of building repairs and maintenance by owners’ committees. This call was made during a parliamentary inquiry, where the ICA pushed for measures akin to recent legislative changes in New South Wales. - read more

Tasmanian Government Insurance Proposal Faces Industry Backlash 07 Jul 2025: Paige Estritori The Tasmanian government's recent proposal to establish a state-run insurance entity has drawn significant criticism from key players in the insurance industry. The plan, spearheaded by Premier Jeremy Rockliff, aims to expand the Motor Accidents Insurance Board into a broader service named TasInsure, offering products including home and contents insurance, small business coverage, and more. The RACT, a major player in Tasmania's insurance sector, expressed considerable concern, labelling the initiative as a simplistic answer to complex problems. - read more

Asbestos Scare Leaves Hospitality Business Uninsured 04 Jul 2025: Paige Estritori The discovery of asbestos-contaminated mulch in a Sydney park led to the cancellation of a festival, resulting in significant financial losses for a hospitality business. Despite these setbacks, the company's claim for coverage under its business interruption (BI) policy was rejected. - read more

Landmark NSW Decision: Dog Walking Costs Covered in Car Crash Injury Claims 03 Jul 2025: Paige Estritori In a groundbreaking decision by the NSW Personal Injury Commission, an insurer has been directed to cover the costs of dog walking services for a car crash victim. The commission ruled that these services classify as domestic assistance under the state’s Motor Accident Injuries Act. This case could pave the way for broader interpretations of 'attendant care services' for claimants. - read more

Extreme Weather Drives $1.8 Billion in First Half Losses for Australian Insurers 03 Jul 2025: Paige Estritori Extreme weather events in Australia have resulted in significant financial impacts for insurers, tallying $1.83 billion in losses during the first half of the year. This comes as insurance companies gear up for further claims linked to ongoing severe weather in New South Wales. - read more

ClearView Names New Underwriting Head Amidst Strategic Changes 30 Jun 2025: Paige Estritori ASX-listed life insurer ClearView has announced the appointment of Peter Tilocca as Head of Underwriting, coinciding with key updates to its underwriting standards and definitions. Tilocca's extensive two-decade career in Australian underwriting includes leadership roles at Zurich, Noble Oak, One Path Life, and RGA Australia. His new role with ClearView commenced on 30 June. - read more

Ombudsman Supports Theft Claimant in Home Business Coverage Dispute 30 Jun 2025: Paige Estritori A recent case has seen a policyholder triumph over her insurer after the Australian Financial Complaints Authority (AFCA) ruled in her favour following a contentious dispute regarding home business operations. The controversy arose when the woman's theft claim was denied by her insurance provider, IAG, over allegations of fraudulent misrepresentation about the use of her rental property. - read more

AFCA Upholds Insurance Fraud Ruling Over Disputed Possum Accident 26 Jun 2025: Paige Estritori A motorist's claim that he crashed into a tree to avoid a possum has been denied by the Australian Financial Complaints Authority (AFCA), which supported the insurer's fraud decision. The incident involved the driver crashing his Jeep—insured for over $20,000—on a dimly-lit street, purportedly avoiding the rain-soaked motorway en route to the store. - read more

Code Watchdog Criticises Insurer for Misleading Rejection Letters 24 Jun 2025: Paige Estritori The Life Code Compliance Committee has recently reprimanded a life insurance provider for issuing misleading rejection letters to policy applicants. These letters were deemed 'ambiguous and contradictory' and failed to clearly inform applicants of their review options after being denied coverage. - read more