A homeowner who claimed for damage caused by ground movement stemming from a leaking pipe will be mostly covered following an Australian Financial Complaints Authority ruling.

The man said he saw cracking in a load-bearing wall in his property on July 8 2022 and filed a claim the next day when he uncovered a water main on part of the wall that was leaking in two locations.

He said the wall was a border between the original home and an extension and that ground movement caused by the leaking pipe had affected several parts of the house.

A Hollard-appointed plumber found water appeared to have been leaking “for quite a while”, causing the area around the kitchen to be damp and nearby stumps to be soaked.

The plumber suggested the stumps may have sunk slightly, noting further cracking on the external wall of the kitchen.

The insurer also engaged an engineer, who inspected the home in October 2022, about a month after the plumber. The engineer said soil under the property appeared dry and water from the leaking pipe had been “minimal”. 

They said the cracking was not caused by the leaking pipe but by long-term issues in the “highly reactive” soil, including its response to seasonal moisture variation, previous droughts, inadequate surface draining and other environmental influences. 

The engineer also found evidence of patch repairs, which indicated the house had a history of movement-related damage. 

The complainant said the home, built in the 1930s, had undergone major reconstruction work, including underpinning, relevelling and replastering, between 2016 and 2019 to fortify its foundations. The extension had been added in the mid-1980s.

He said there was no substantial cracking between 2016 and 2022, and the claimed damage appeared suddenly in July 2022.

The complaints authority accepts the home had previous movement-related damage but does not believe this applies to the rooms around the extension border. It says the experts did not find the claimed cracking looked old or worn.

The authority says videos provided by the complainant and the plumber’s observations show the leak was substantial, contrary to the engineer’s findings.

It has also challenged the engineer’s floor-level survey, labelling its results “not conclusive”. 

“The house has a history of movement-related damage, some of which has been patched over,” the authority said. “However, the evidence does not show the damage around the extension border is part of an ongoing pattern of movement-related damage. 

“The factors cited by the engineer are all long-term factors that would cause cracking to develop gradually. The evidence indicates the damage around the extension boundary appeared suddenly.” 

AFCA says the loss was probably caused by the “sudden escape of liquid”, which occurred “suddenly, unexpectedly, and unintentionally”.

The authority says Hollard is liable for cracking in several parts of the home and a drop in the kitchen floor. Other areas of cracking unconnected to the leak and are not covered.

The insurer can settle the claim by repairing the damage or paying for repairs.

Click here for the ruling.