An experienced builder has lost a claim dispute with Youi over ground movement damage to walls, floors, ceilings, windows and doors in the six months after a storm. 

The man’s insurance specified it did not cover landslip, subsidence or erosion over time and excluded damage “caused directly or indirectly by … expansion or contraction of the earth, ground or soil”. 

Both parties agreed the damage was caused by subsidence well after the storm, and now the Australian Financial Complaints Authority (AFCA) has ruled it was outside the 72-hour period in which subsidence damage after a storm was covered.  

“The policy clearly limits cover for damage of the type that has occurred and it is fair that the insurer be able to rely on its policy restrictions,” the authority said. “The damage is ... due to seasonal variation in soil moisture rather than a one-off storm event. 

“I realise the complainant will be disappointed by this outcome ... How distressing it must have been for him to see water flooding onto his property and beneath his home for such a long period of time with no way to prevent it.  

“He foresaw the risk from the outset. He was conscious of the subsequent risk as the property dried out – he notified the insurer and thought he would be covered – however, this outcome is fair because the policy clearly limits cover for damage of the type that has occurred.” 

In October 2022, large volumes of water from a roadway above the property had flowed down and under the home, covering a hardwood deck. Youi accepted an initial claim for damage to cafe blinds, an air-conditioning unit and the deck. 

The builder quickly raised concerns that the ground under the house would dry out and cause movement that would affect the home. He later lodged a claim extension for cracking of internal ceiling and wall surfaces, misalignment of doors and windows, and flooring damage because it was caused by earth movement. This was declined.  

Youi said the subsidence and the damage was part of a pattern of movement over time, and its consulting engineer said the cause of the damage was long-term differential settlement of the footings of the home due to seasonal changes in soil moisture, exacerbated by poor drainage.  

Parts of the ground were still damp six months after the event, and the engineer said this was evidence of a broader, long-term problem.  

There was evidence of previously repaired cracking and of past floor damage in the home. There were problems with drainage at the property, and extra drainage the builder had added was insufficient. 

“It is agreed that the damage occurred well after the storm event. The complainant reported it some six months later in March 2023, he had been conscious of the risk and would have been watching for it,” the AFCA ruling said. 

“The damage occurred well outside the 72-hour period. It is thus excluded from cover and the insurer is entitled to deny the claim.”  

See the ruling here.