A complainant whose investment property was significantly damaged by a fire lit by his son has lost a dispute after his insurer declined the claim, but offered an ex-gratia payment of more than $260,000.

The homeowner lodged a claim after the property was set alight on February 17, 2021. The man’s son, referred to as D, was believed to be living there at the time of the event and pleaded guilty to causing the fire.

Suncorp declined the claim, saying that its policy’s Product Disclosure Statement makes clear that malicious acts and vandalism arising from someone who lived at the insured address with the policyholder’s consent would not be covered.

The insurer also noted that the policy held exclusions for deliberate acts that demonstrate "a reckless disregard for the consequences” caused by the insured, their family, or anyone living at the insured address with their consent. 

The complainant said he thought D had moved out of the property weeks before the event, noting that his partner and child had already left months ago. The claimant said that the home was getting renovated and was to be sold.

But neighbours of the property said D had been living at the home and saw him taking in the bins on the morning of the fire. Records showed that D had been on bail at the time and that he recorded the insured address as his address.

The property was also found to have been partially furnished and held various clothing and contents of D’s.

The Australian Financial Complaints Authority (AFCA) panel said there had been no dispute that D had been staying at the insured address with his father’s consent and that it was satisfied that he caused the fire.

The complainant did not dispute that D caused the fire but argued that the policy exclusion referring to “deliberate actions by you” was not applicable because he did not consent to D lighting the fire.

AFCA said that the claimant’s interpretation had been “misguided” and that the exclusion applied to anyone living at the property or acting with the consent of the insured, which it said D had been by living at the house. 

The panel noted that the court refused to record D’s guilty plea due to concerns over his mental health but said there was not enough information surrounding D’s state of mind to overrule the insurer’s decision.

“In the absence of any supporting evidence to confirm D’s state mind at the time the fire was lit, the panel considers it fair to conclude the D lit the fire deliberately (as supported by the balance of information),” AFCA said.

“The panel acknowledges the difficulty the complainant has in obtaining the relevant psychiatric evidence. This is unfortunate and in no way reflects a lack of effort by the complainant.

“Further the panel accepts the psychiatric evidence may indicate ‘D’ was, at the time of lighting the fire, in such a delusional or mental state that he was incapable of forming deliberate intent such as to constitute a malicious or deliberate act.”

AFCA said it would be fair for the complainant to ask Suncorp to reassess its liability once the psychiatric report was provided and the court outcome had been determined.

Suncorp offered a cash settlement offer of $261,318 to the complainant on an ex-gratia basis. The claimant said that this payment was insufficient to complete the repairs and sought an additional $166,159 or $261,328, based on his provided quotes.

The insurer said that its offer had been based on an itemised repair quote from an assessment from its builder. AFCA said that Suncorp’s offer had been fair.

The panel noted that the property had been now demolished. It said that any alterations from the insurer due to the receipt of a psychiatric report would be prejudiced and unlikely to result in an increase in any settlement increase.

Click here for the ruling.