Homeowners whose property repair work stopped part way through after their insurer cited a breakdown in the relationship will have the job completed after winning a claims dispute.

Allianz offered a cash settlement for the remaining work, saying the relationship with the complainants became untenable after several Australian Financial Complaints Authority (AFCA) complaints were filed during the claims process.

But in a ruling AFCA said that if an insurer starts repairs, it should finish them. "It is unsatisfactory to abandon repair work and leave the insured responsible for finishing it," the ruling says. It also said the relationship breakdown was "mostly the insurer's fault".

The complainants held a home and contents policy and lodged their initial claim after a falling tree damaged their home on March 13, 2019.

A month later, the homeowners filed the first of six AFCA complaints against Allianz. They said the insurer refused to fix the damage to their roof and offered a cash settlement for an amount less than required to restore it completely. The insurer later agreed to replace the roof.

Throughout 2019 and 2020, other complaints were made, with the claimants describing the repairs as “one disaster after another”.

The insurer initially appointed a builder to repair the home and a loss adjuster, referred to as SW, to manage the claim.

The homeowners complained about the work done by the builder and requested the insurer appoint another builder, referred to as JL, to rectify the faulty repairs. In an email from September 10 2019, SW said the initial builder’s repair work had been “very poor”.

In November 2020, the complainants reported satisfaction with JL but said the repair work came to an abrupt and unexplained halt without communication.

The homeowners said they contacted JL’s subcontractor, who told them Allianz had not been paying him enough for the repairs and refused to appoint a specialist landscaper needed to repair outdoor damage.

The complainants requested SW provide workers to complete the repairs to their home and later asked the insurer to remove the loss adjuster from the claim. Allianz refused to remove SW, and SW and JL inspected the complainants’ home.

SW’s report from June 23 last year highlighted cracks in the lounge room ceiling, en suite damage, and repainting requirements for several rooms. The report outlined that repairs would cost more than $50,000, but the insurer did not adjust its settlement offer of $3681.11 until March of this year after an AFCA request.

The complainants told AFCA that they should not have allowed the inspection to take place, and would not allow any more until a decision for this complaint had been made.

“It just gives them more time and evidence to make up some bullcrap about why they shouldn’t fix my property,” the complainants said.

The homeowners also reported mould that they said was painted over instead of cleaned. Insurer-appointed experts carried out several inspections, none of which found any mould.

After SW’s report, the insurer opted to assign a hygienist to investigate any signs of mould even though it was not required to, but the complainants refused.

AFCA determined that Allianz was liable for the repairs mentioned in the report. The panel acknowledged the strained nature of the parties’ relationship but rejected the insurer’s offered cash settlement of $62,500 for the repairs.

It said the complainants were not inhibiting the ongoing repair works and reported satisfaction with JL’s work.

AFCA said that the relationship was largely dysfunctional because Allianz mishandled the dispute and that most of the homeowners’ previous complaints had valid grounds.

"It would be unfair for the insurer to cash-settle the claim. Therefore, the insurer must settle the claim by arranging the outstanding necessary repair work, and guaranteeing the repairs," AFCA said.

"The parties must work together to facilitate repairs. The complainants must comply with the insurer’s reasonable requests, including requests to allow the insurer’s contractors to access the home."

Allianz was required to pay $4967 for furniture damaged by the initial builder and interest from January 13 this year to the payment date.

AFCA said the insurer’s mishandling of the claim caused stress, inconvenience, and unjustifiable delays and awarded the complainants $4000 for non-financial losses.

Click here for the ruling.