A homeowner has won a compensation payout after successfully arguing the insurer failed to make the property safe after it was hit by a falling tree, leading to additional damage beyond the initial incident.

Australian Financial Complaints Authority (AFCA) rules allow for an award up to $5400 if the “insurer caused the complainant to suffer an unusual degree or extent of inconvenience, delay or interference”.

In late 2021, a claim was lodged for damage to the property when the tree fell on it. IAG accepted the claim and undertook repairs.

It paid out the contents up to the $60,833 sum insured less restoration costs of $15,086.19.

The complainant was unhappy with the settlement of the claim, arguing more damage was caused to her contents due to the insurer’s failed make safe efforts and negligence. 

She supplied emails showing she raised her concerns with the insurer.

The policyholder struggled with temporary accommodation as the claim dragged on.

The damage to her contents caused by the initial event was around $18,376.32. But she says subsequent water damage to her contents was because of the failed make safe. 

AFCA determined that the policyholder had shown there was additional damage because of the insurer’s claims handling. 

It said the sum insured applies to losses caused by the insured event, not losses caused by the insurer’s failure to meet its obligations under the policy.

“There were substantive issues with the insurer’s claims handling that significantly impacted the complainant. Therefore, the insurer should pay $5400 in non-financial loss,” AFCA said.

“The insurer has not disputed, or addressed, the complainant’s assertion that the failed make safe was due to its negligence. This assertion is important. If the complainant’s contents suffered damage due to the insurer’s failure to properly manage the repairs or make safe, then I do not accept it can cap its liability to the sum insured.”

AFCA said while the insurer undertook make safe works early in the claim there was no evidence that it maintained the works or undertook urgent repairs to the roof to ensure it was watertight and protected.

AFCA said the insurer should assess and settle the complainant’s contents claim without applying the sum insured in addition to the $5400 non-financial loss compensation.

Click here for the ruling.