Homeowners who lodged a claim after contracted painters damaged their property during a violent attack have lost their challenge to increase their insurer’s cash settlement offer of $53,000. 

The complainants lodged a claim with IAG after the recently purchased house, which had been under renovation, was damaged by the group of painters in November 2021. 

The male claimant said that the workers had “turned on him” during a meeting over workmanship issues and attacked him before damaging several walls and windows in the home. The painters were later arrested in relation to the assault.

An assessment from an insurer-appointed builder, referred to as AI, recommended that the matter be handled with a cash settlement as repairs might not match the existing texture. The builder quoted a scope of works (SOW) for the repairs at $13,203 in early December.

The complainants were dissatisfied with IAG’s offer and said that the insurer should consider its counter quote from its builder, which put the total cost of repairs at $121,400, although it had not been itemised.

The insurer requested that AI revisit its initial quote, which was updated to $19,812 after a re-assessment. IAG offered a cash settlement based on AI’s quote in April last year, saying that it would be “unable to manage and warrant repairs” due to the extent of damage and given that the property was still under renovation.

The homeowners dismissed the insurer’s offer again, providing a report from a quantity surveyor, referred to as JB, which said that AI’s SOW was insufficient to cover the rectification works and “not a genuine quotation”.

JB reported that the property had sustained water and ceiling damage and that mould had grown. The surveyor said that a realistic repair for the damage would be in the cost range of $120,000 to $130,000.

IAG denied responsibility for the mould or water damage and said that the complainants would have to lodge a separate claim for the damage to be assessed, as this dispute related to the malicious damage caused by the painters. In August last year, it offered to increase its cash settlement by 25%, taking its offer to $24,765, which the claimants also rejected. 

The insurer engaged with a building consultant, referred to as CF, to inspect the property and report on the damage, but the complainants had denied them access. CF later provided a desktop report based on an analysis of the various quotes, which said that the claimants’ quotes had been “grossly excessive”.

CF estimated that the repair cost amounted to $39,504, which the insurer uplifted with a 20% contingency, as well as fees to cover four weeks of temporary accommodation. The insurer’s offer amounted to $53,000.

The claimants told the Australian Financial Complaints Authority (AFCA) panel that the offered settlement was inadequate because it did not consider rectification works for mould damage, which they said had worsened due to the insurer’s delays. 

AFCA disagreed with the complainants, saying there had been no evidence to show “a causative link” between the malicious damage and water ingress, which led to the mould growth.

“Given that the malicious damage involved scratching and gouging to internal walls and a window frame, the panel on balance considers it unlikely any such link exists,” AFCA said.

“The panel is also not satisfied the insurer improperly delayed progression of the claim. It made a claim decision well within the standard timeframe referred to in the General Insurance Code of Practice.”

The panel said that delays that led to the mould growth could instead be attributed to the complainants’ failure to provide an itemised counter quote until mid-June last year, more than seven months after the claim had been lodged. It said that if the homeowners wished to have the mould damage covered, they would have to file a separate claim. 

AFCA acknowledged that IAG’s offer was “overall reasonable” and required it to waive the $1000 policy excess. 

The panel also determined that the insurer’s offer for temporary accommodation was fair despite assessments from AI that suggested it would not be required. AFCA shot down requests from the homeowners who asked for ten months’ worth of accommodation, estimated to cost $23,336.

The ruling also did not require IAG to pay costs associated with non-financial losses to the claimants nor professional expenses linked to the expert reports provided.

Click here for the ruling.