A homeowner who said a “misleading” estimation tool was to blame for her insufficient sum insured has lost a bid to increase her coverage.  

The woman lodged a claim last March after a fire left her home uninhabitable.  

Open Insurance accepted the claim and engaged two builders who quoted repair costs of $637,658 and $656,673. The woman’s home had been insured for $495,000.  

The insurer said it could not repair the home as new and elected to cash settle for the sum insured.  

The settlement included a maximum temporary accommodation benefit of $45,000, $45,000 for the removal of debris, $1500 for damage to landscaping, and $5000 for environmental benefits.  

The claimant said it was unfair for the insurer to cash settle, noting she had relied on its estimation tools to determine her coverage. She said the calculators were inaccurate and detrimental to her.  

The woman said she had health issues and English was her second language, which caused added difficulty.  

In a dispute ruling, the Australian Financial Complaints Authority acknowledges the homeowner’s difficult situation but rejects her argument that Open Insurance should pay more.  

It says the insurer asked customers at policy inception to “carefully review these limits and ensure they are enough for you”.  

“Ultimately, it is a matter for the complainant to choose how much she insured her property for,” the authority’s ombudsman said.

“While the insurer can provide calculators for the complainant to use as a guide, the insurer is not able to provide the complainant with financial advice about what to insure her property for because it is not licensed to do so.

“I empathise with the complainant that she was heavily reliant on these tools given she is not a builder.

“However, it would be unfair for an insurer to be held liable for any shortfall in estimations given it is not aware of each policyholder’s needs, requirements and changes within the building industry during the policy period.”  

AFCA considered the claimant’s concern that the rebuild quotes were “overinflated”, but says there is insufficient evidence of this.  

The woman also said the insurer did not proportionally increase her sum insured when her premiums rose, noting her premiums gained 19% but the covered amount only 10%.  

However, the authority says there is no requirement to adjust values proportionally and the woman “had an opportunity to change the sum insured amount if she was dissatisfied ... or seek alternative insurance”.  

The woman has been awarded $2000 compensation for non-financial losses relating to inappropriate suggestions made by the insurer that she was attempting to profit from her cover when she requested temporary accommodation, and for delays in its response to a building order.  

Click here for the ruling.