A commercial strata insurance policyholder has lost a claim dispute over a damaged entry sign that it says dropped during a storm and cost more than $15,000 to replace.

The Australian Financial Complaints Authority (AFCA) upheld Lloyd’s decision to decline the claim, ruling “damage can have more than one cause”.

Lloyd’s had denied the claim on the basis that the collapse of the signage and posts was due to factors excluded under the policy such as wear and tear, rust, gradual deterioration and defects.

“When deciding whether the policy responds, I need to identify what the proximate cause of the damage was,” AFAC says in the ruling. “This is a question of fact depending on the circumstances.”

AFCA says it accepts there was a storm and high winds on the date of the loss and that it is possible the weather conditions on that day may have triggered the damage to the signage and posts.

“However, I am not satisfied the storm and winds were the proximate cause of the loss and damage,” AFCA says. “Whilst I acknowledge there were some maintenance works completed, these were done sixteen months prior to the reported loss.

“In my view, and in the absence of any compelling expert evidence from the complainant to the contrary, the proximate causes of the loss were the rust and deterioration the posts over time which are clearly evident in the photographs accompanying [the Lloyd’s assessor’s] report.”

AFCA says the condition of the posts compromised the structural integrity of the steel and signage, making it unable to resist weather conditions that might otherwise have had no effect.

The Lloyd’s assessor, who was appointed to inspect the property in September last year, a month after the claim was lodged, reported the posts supporting the sign may not have capping covers to allow water to drain into them.

Other observations he made include evidence of rust and deterioration to the inside of the posts and the remaining section of posts were full of water.

The assessor also reached out to the policyholder’s builder about the rust to the poles and the builder stated “there did appear to be some rust to the poles which would have contributed to the sign post failing”.

The policyholder, a strata plan, had described in the claim form “the sign came down in strong winds - sheared off at the base of the sign” and that the object “came down on a vehicle exiting the complex”.

It further says in the form it will reuse the sign if the option is available but also points out “the poles will need replacement and the sign reinstalled”.

The policyholder says also no owner was aware of any underlying issues with the sign prior to the storm event.

It provided a quotation from the builder for new signage and posts in the sum of $15,694.80

Click here for the ruling.