AFCA Sides with Policyholder in Storm Damage Dispute

0

The policyholder had reported a cracking ceiling last September, with subsequent investigations revealing damage in both the lounge room and kitchen. Auto & General first suggested that the damage was due to heavy wind and water ingress, consistent with storm damage covered under the policy, courtesy of rain entering through broken roof tiles.

However, the insurer later revised its stance following an expert report. This assessment pointed to long-term water staining on timber rafters as evidence, arguing the ceiling’s crack was due to the failure of nails or glue, suggesting persistent deterioration rather than storm damage. A second expert report supported these findings. Furthermore, Auto & General backed their reversal with Bureau of Meteorology data indicating minimal rain and wind speeds at the time of incident at a nearby location, casting further doubt on the storm damage claim.

AFCA, however, discerned potential multiple causes for the damage, acknowledging that a storm did impact the area surrounding the property. The authority noted discrepancies in the insurer's evidence, such as the reliance on weather data from a suburb 10km away and the lack of photographic evidence supporting structural failure of the ceiling’s fixtures.

The ruling underscored that the pattern of damage—restricted to certain rooms—was consistent with localised water ingress, rather than widespread structural failure. As a result, AFCA has directed Auto & General to honour the claim. While the insurer had previously waived a $2000 excess, AFCA concluded no additional compensation for distress was necessary, although the complainant had noted significant personal vulnerabilities and distress from the denial.

This decision reflects the essential role of AFCA in upholding consumer rights in the financial sector, ensuring that policyholders are not unfairly disadvantaged. It demonstrates the importance of detailed evidentiary review and consideration of all potential causes in insurance claims.

Looking forward, this ruling might influence how insurers assess and justify claim denials, emphasizing the need for robust justification and accurate data. The outcome is a reminder to policyholders and insurers alike of the critical oversight AFCA provides within the Australian insurance landscape.

Published:Friday, 18th Jul 2025
Source: Paige Estritori

Share this news item:

Insurance News

Clear

AFCA Sides with Policyholder in Storm Damage Dispute 18 Jul 2025: Paige Estritori A recent ruling by the Australian Financial Complaints Authority (AFCA) has favoured a policyholder in a dispute with insurer Auto & General over storm damage. The case involved a collapsed ceiling, initially attributed to a storm by the insurer before an about-face led them to deny the claim. The AFCA decision marks a significant instance where consumer protection mechanisms have countered an insurer's attempt to deny coverage. - read more

Transforming Home Insurance: The Rise of the Home Energy Revolution 17 Jul 2025: Paige Estritori The landscape of home insurance policies in Australia stands on the brink of transformation as an increasing number of homes, apartment complexes, and small businesses are projected to integrate solar panels and battery systems by 2050. According to a report from the actuarial consultancy Finity, these homes will evolve into independent power stations, generating and storing their own electricity, marking a pivotal shift in home energy management. - read more

Life Insurers Reevaluate Amid Rising Mental Health Claims 16 Jul 2025: Paige Estritori In a growing industry concern, the Council of Australian Life Insurers has highlighted an alarming increase in mental health-related claims, which are now the leading cause of total and permanent disability (TPD) claims. The rise has driven insurers to reconsider their current practices and strategies to address this trend. - read more

QBE Highlights the Importance of Adequate Landlord Insurance 15 Jul 2025: Paige Estritori Landlords in Australia have been advised by QBE Insurance Group to reassess their insurance coverage, following survey findings that indicate many could encounter financial hardships if their rental operations are interrupted. According to QBE's data, 38% of landlords might face financial challenges should their properties become uninhabitable or rental payments cease for a duration of two to six weeks. - read more

Court Denies E-Scooter Negligence Allegation Against City Council 14 Jul 2025: Paige Estritori An Australian court recently ruled in favour of the City of Joondalup, rejecting a negligence claim lodged by an injured e-scooter rider. The Western Australia District Court found the city not liable for an accident involving insurance broker Kirstin Leibbrandt, who collided with a fence post while riding an e-scooter in the Perth suburb of Hillarys. - read more

Mental Health Surpasses Other Causes in TPD Claims, Doubling Payouts Over Five Years 14 Jul 2025: Paige Estritori Recent findings from the Council of Australian Life Insurers (CALI) reveal that mental health issues have become the primary cause of Total and Permanent Disability (TPD) claims. Insurers disbursed nearly twice the amount for such claims in 2024 compared to five years prior. This data originates from the CALI and KPMG's Cause of Claims Results Report, highlighting a significant shift in the nature of insurance claims. - read more

Impact of Trump Tariffs on Global Insurance Industry 11 Jul 2025: Paige Estritori According to Swiss Re’s latest Sigma report, the growth of property and casualty premiums is moderating in both Australia and globally. This moderation is primarily driven by a slowdown in rate hikes. Additionally, the Trump administration's America First trade policy is putting further pressure on the insurance sector. - read more

Navigating Changes in Australia's Life Insurance Advice Landscape 10 Jul 2025: Paige Estritori The conversation on the shifting dynamics in Australia's life insurance advice sector featured Zurich Australia's head of adviser channel, Kieran Forde, and Hayes & Co director, Katherine Hayes. They engaged with editor Chris Dastoor to spotlight the current market conditions and future prospects for financial advisers in this domain. - read more

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