A homeowner whose property suffered significant storm damage will be covered for building repairs and mould remediation after a claims dispute was settled partially in her favour.

The complainant lodged a claim under her home insurance policy on May 17 last year, after several rooms in her home were damaged by stormwater and mould in March.

IAG accepted liability for some of the mould exacerbated by the storm and offered a cash settlement for damage caused by water ingress but limited its cover because of the building’s poor maintenance and pre-existing deterioration, which the claimant disputed.

The Australian Financial Complaints Authority (AFCA) was provided with a report from an IAG-appointed builder that noted the roof had significant maintenance-related issues, including built-up debris, observable cracking, and collapsed gutters.

Reports from the builder and a separate consultant said water ingress occurred from the already deteriorated roof and considered the internal damage to the property to be a direct result of storm activity.

A report from a complainant-appointed inspector notified the panel that the building was not in compliance with relevant building codes and quoted costs for an entire building renovation at $425,627.75.

AFCA said it was not the insurer’s responsibility to ensure the property complied with current building standards and that the reports clearly established that the property had severe pre-existing damage and maintenance issues.

The homeowner said the insurer did not identify any pre-existing damage or maintenance issues during a previous storm damage claim in 2019. IAG said its assessment was limited to the specific damaged area when it handled that claim.

The complainant said she rectified some maintenance issues that she was alerted to due to the 2019 claim. However, the panel noted no evidence of any maintenance work done after the claim or before the storm.

AFCA ruled IAG was not liable to replace the roof or for other damage not directly related to last year’s storm event. The panel said the insurer’s cash settlement offer of $103,884.44 was reasonable and required it to pay interest on the sum from January 27 this year until the payment date.

IAG’s experts assessed that long-term mould growth within the property stemmed from perpetual water leakage and increased humidity.

A hygienist report said recent water ingress was the cause of the increased humidity with visible surface mould throughout the property, including on doors, door frames, and window frames.

Experts hired by the complainant confirmed the property had elevated moisture, with environmental factors considered one of the primary reasons, and the property was regarded as high risk.

AFCA determined that pre-existing mould did exist on the property but the claimed event amplified internal mould growth.

The panel considered repair quotes from both parties for mould remediation and settled on a reduced cost from the complainant’s quote of $77,304. AFCA required the fee balance to be split between the two parties, with the insurer paying $38,642 as well as interest from January 27 until the payment date.

IAG was required to extend the temporary accommodation it provided for the complainant for six more months while mould remediation works were ongoing at her home. The claimant had been in temporary housing since May 26 last year.

AFCA said the insurer’s settlement of $96,169 to cover the complainant’s contents was fair despite disagreement from the homeowner.

The panel shut down her complaints that the insurer failed to warn her about mould deterioration, saying it was likely that some of her contents were already affected by the pre-existing mould.

The complainant was awarded $1500 compensation for non-financial loss, as she experienced stress and inconvenience, and had her $1000 excess waived by IAG.

AFCA noted that the initial building assessment was not thorough enough and likely contributed to delays in the claims process. It also said the insurer’s failure to conduct any drying or remediation early may have contributed to the homeowner’s losses.

IAG was also required to contribute $5000 to professional costs associated with one of the claimant’s mould experts who assisted in AFCA reaching its decision.

Click here for the ruling.