A homeowner will have his claim paid and has been compensated the maximum amount for non-financial loss after his insurer accepted a claim, then changed its mind and denied it on the day his family was moving to temporary accommodation.

The complainant, whose home was significantly impacted by a storm, won compensation after a dispute ruling found that the damage had been caused by leaks from poor roof repairs from a previous claim.

The homeowner lodged a claim after reporting damage to multiple parts of his property, including cracking in the garage, lifted floor tiles, and black mould in the kitchen. He says the damage had been caused by the storm as well as faulty roof repairs after the insurer had replaced it in 2021 due to a previous hail damage claim.

The Australian Financial Complaints Authority (AFCA) determination says IAG had initially accepted the claim, but then decided that was an error, and denied it.

The complainant says the insurer had instructed the family to move out of the property because it was unsafe to live in. They spent a month packing their things, found alternative accommodation and paid the rental bond.

The complainant says on the day they were set to move out, while their possessions were being transported, they were told the claim would be denied.

 “The insurer did not provide an adequate explanation for why the claim was originally accepted and then it changed its mind,” AFCA says, and orders the insurer to pay $5400 compensation.

IAG was also ordered to pay the claim.

The ruling says an IAG-appointed roofer who inspected the property in June last year highlighted poor workmanship in the installation of flashings and soaker trays over the kitchen and bedroom, which caused water to enter the property. The roofer said there was “no signs of storm-related damage” to the affected areas.

IAG accepted it made errors with the roof replacement in 2021 and completed works to replace it again. A builder’s report from February 24 on the newly replaced roof found that, despite the repairs being completed, the roof continued to have issues around rainwater ingress that had to be addressed.

But the insurer disputed that the one-off storm event could have caused the extent of the damage, which would have otherwise been excluded from its cover. 

A report from the insurer’s engineer, referred to as MC, says the floor tile raising had been consistent with normal movement due to increased environmental moisture. MC says there had been no evidence to suggest that there had been moisture ingress in the areas and attributed the damage to a lack of articulation joints in the tiles. 

MC also disputed that a singular localised roof leak could have caused as much damage as had been reported.

However, the complainant challenged MC’s findings after providing information that showed there had been multiple roof leaks, which AFCA says was the fault of the insurer’s poor repairs.

AFCA says it did not find MC’s report persuasive as it had failed to “adequately consider” other available information from other experts, including a restorer referred to as LR, who reported that the tiles had been lifted due to increased moisture in the subfloors.

“I accept any roof leaks were due to the insurer’s faulty repairs that necessitated its replacement. I do not consider MC adequately considered this information,” AFCA said. 

“I also do not consider MC adequately considered the other available information regarding the high moisture readings in multiple rooms, highlighted in LR’s report.” 

A report from the complainant’s expert, referred to as BS, provided images showing “substantial evidence” that the roof leaks caused water to run down the property’s interior wall frame. 

BS says the water ingress eventually caused the black mould to grow around parts of the framing and recommended that all loose tiles be replaced. 

AFCA agreed that BS’s report provided a more likely explanation of the cause of loss, as it had been consistent with the roofer’s and restorer’s findings.

The ruling required IAG to prepare a scope of work to repair all of the claimed damage, as it had been caused by its negligence relating to the previous failed roof repair. 

“The PDS outlines the insurer provides a lifetime guarantee on the workmanship of repairs that it authorises,” AFCA said. 

“Whilst the insurer has replaced the roof, it has not repaired the damage to the property that has been caused due to the defective repairs.”

Click here for the ruling.