A homeowner will not receive compensation for fire damage caused by a defective fireplace after losing a claims dispute.

The complainant filed a claim on September 21 last year under their home insurance policy to cover damage to a newly constructed area of the property containing an alfresco and fireplace.

The claimant told their insurer, IAG, that they lost power while watching a movie and, after an hour, noticed a fire in the roof space near the chimney.

The insurer denied the claim, saying the recently installed fireplace had been defective and was the cause of the fire.

The Australian Financial Complaints Authority (AFCA) panel heard findings from an insurer-appointed builder that noted the fireplace was not constructed to National Construction Code standards.

The report said that the fireplace’s walls were only 76mm wide, significantly thinner than the minimum 180mm required by the guidelines.

An investigator hired by the insurer found a small hole in the fireplace structure that allowed heat to penetrate and was the likely source of the property fire. The investigator said given the fireplace had only been built in the last two years; the gap likely resulted from poor craftsmanship.

The claimant provided no evidence to counter the insurer’s experts, and had concerns that the fireplace sustained earthquake damage shot down by the builder’s report.

The panel said that even though the fireplace had approved drawings and permits, the issues with its construction quality were apparent.

AFCA said IAG is entitled to deny the claim as its policy clearly defined exclusions for damage caused by poor craftsmanship.

The panel also denied the complainant’s request for non-financial loss compensation for the insurer’s handling of the claim.

It acknowledged that the homeowner was stressed due to delays but said IAG had a right to conduct a proper investigation and that other delaying factors were not in the insurer’s control.

Click here for the full ruling.