An IAG customer who challenged the insurer’s decision to decline her claim for damage to her houseboat after it sank during a storm has lost her dispute before the Australian Financial Complaints Authority (AFCA).

AFCA says a “significant” storm event occurred on May 28 2019 in the NSW area where the houseboat was moored, causing other vessels to break free.

But it says based on the evidence produced, it was most likely that the houseboat sank due to wear and tear, gradual deterioration, rust, corrosion and lack of maintenance.

And since the boat insurance policy the customer took up in February 2019 excluded cover for damage caused in such circumstances, IAG had the right to dismiss her claim for compensation, AFCA says.

“The insurer has established that on the balance of probabilities the damage to the boat was caused by events excluded under the terms of the policy,” AFCA ruled in its determination.

The woman, who had her 1996 houseboat insured for an agreed value of $80,000, says her vessel was in good condition and had been repaired after a previous capsize event in late 2018.

She also accused an assessor, appointed by IAG to inspect the houseboat damage caused by the 2019 storm, of lying in his report.

IAG says the assessor’s report found a number of issues with the houseboat such as electrolysis and rust issues as well as absence of rectification works on top of the pontoons.

The assessor report says it is likely the poor condition of the hull combined with large chop caused the vessel to sink.

It was also noted that while strong winds affected the area on the day of the storm, other vessels broke their moorings but did not sink.

IAG says it is these reasons and also the woman’s failure to disclose the boat had previously sunk in 2018 that led to the decision to decline her claim.

The insurer says had she disclosed the 2018 sinking incident when she took up the policy, it would have asked for a marine survey, or condition report, before deciding whether to offer coverage.

AFCA says the woman did not breach her disclosure duty as she was not asked if there had been such an incident when either incepting the policy or lodging the claim.

“While I accept the insurer would have likely requested a new survey if the information about the sinking was disclosed, there was no obligation on the complainant to disclose this event,” AFCA said.

“The 2018 sinking occurred when the complainant had third party insurance only. A claim query was made, but not lodged."

Click here for the ruling.