An owners corporation seeking to recoup $55,000 it spent removing pavers from a back yard and replacing them with a concrete slab has lost a claim dispute after insurer-appointed builder quotes revealed the work could have been done for a fifth of the cost.

The insured property was damaged by a storm in February last year when a large tree fell in the back yard and damaged fences and paving. Eight weeks later, a claim was lodged under a Chubb residential strata insurance policy.

Chubb said it could have repaired the paving for $10,534 and paid out that amount.

By the time the claim was lodged, the owners corporation had already removed the tree and a fence which divided the yard in two, and replaced perimeter fences, removed all the pavers from the yard and replaced them with the concrete slab.

Chubb said this breached the policy terms and so it did not owe the $44,466 balance.

The Australian Financial Complaints Authority (AFCA) ruled Chubb was not required to take further action.

“If the complainant adhered to the policy terms by promptly informing the insurer of the damage, the insurer could have repaired the paving for $10,534,” AFCA said.

“The complainant breached the policy terms, and has not given a reasonable excuse for doing so. It would be unfair for the insurer to pay more than it would have had to pay if the complainant adhered to the policy terms.

“The complainant did not inform the insurer of the damage for two months, and completed repairs before informing the insurer.”

The policy, which covered sudden and unforeseen damage, including storm damage, said policyholders must promptly inform Chubb, preserve any damaged property and make it available for the insurer’s inspection and not repair or replace anything without Chubb’s agreement.

“The complainant disposed of damaged property, and did not make it available for the insurer’s inspection,” AFCA said. “It carried out repairs without the insurer’s agreement or knowledge. By taking these actions, the complainant breached the policy terms.”

The owners corporation was surprised at how low the Chubb builder quote was and provided an undated invoice for $55,000. It said replacing the paving with a concrete slab was cheaper than repaving the yard and provided a builder quote from March last year for $66,000 to remove and replace all paving. It said its builder had verbally quoted $16,000 for the pavers alone and also complained site access was very complex with the narrow common driveway.

Chubb’s builder said that quote was “ridiculously high and not commercially realistic”, and site access was very good as building materials could simply be walked up the driveway. It quoted $10,534 and said it would have been willing and able to perform the work if it had not already been done. A second builder quoted Chubb $10,803 to fix the damaged pavers.

“This is much lower than the amount claimed by the complainant for replacing the paving with a concrete slab,” AFCA said. “The complainant has not provided information showing the insurer could not have repaired the paving for the amount quoted. Therefore, the insurer is not required to pay more.”

AFCA said while it was reasonable to ensure the safety of the site as soon as possible, the work arranged was not limited to making the site safe. Even if the owners corporation had to take emergency safety measures without waiting for the insurer’s agreement, there was no reason it could not have told Chubb it was doing so.

“The policy expressly forbids this,” AFCA said. “The complainant has not explained why it breached the policy terms.”

The corporation was represented by an insurance broker which advised it to carry out repairs before notifying Chubb. The AFCA determination did not consider whether there was any misconduct or whether the owners corporation was entitled to any compensation from the broker.

See the full ruling here.