A first-time homebuyer has won a $62,938 payout in a claim dispute after thieves broke in and vandalised his insured property, setting fire to a number of rooms, after he was forced to move out when COVID struck.

The man held a Suncorp home insurance policy purchased online and lodged a claim in June last year due to the malicious damage.

Suncorp denied the claim, saying he had failed to meet pre-policy duty of disclosure and had it known the true condition of the property when he applied for insurance, his application would have been declined.

A Suncorp-appointed structural engineer who inspected the property found extensive maintenance-related issues likely to have been present for several years.

The long list included wood rot and termite damage, cracks in floor tiles, deterioration of external timber, moss growing on roof coverings and gutters, a patch repair to the wastewater pipe connection, rusted downpipes, damaged timber fence boards, signs of cracking and concrete cancer at the rear doorsteps and no articulation joints along external brickwork.

The inspection indicated those defects and issues were present prior to the break-in and renewal of the policy.

The Australian Financial Complaints Authority (AFCA) agreed the evidence indicated the defects appeared related to lack of maintenance and past building practices – and not the fire – however it said Suncorp had not established the homeowner knew, or should reasonably have known, the property was not in a good condition when he applied for the policy.

“It is fair that the insurer covers the claim,” AFCA said. “At least some of the matters identified such as signs of concrete cancer and construction defects would require specialist knowledge that the complainant did not have and could not reasonably have been expected to have.”

During the process of applying for the policy online in June 2019, the man was asked: ‘Is the property well maintained and in good condition?’ and he selected ‘Yes’. A help button next to the question gave a long list of example faults and defects, including termite and wood rot damage.

The owner settled the purchase of the property in July 2019 while it was already tenanted and moved into the property two months later but was forced to move out in March last year due to COVID. The property was then left vacant.

He did not obtain a building or pest inspection prior to purchase, though an engineer friend advised it was fine and liveable with no obvious damage. Images from the real estate sales advertisement accompanied a letter from the agent that backed his version that at the time of sale, the property was in a fair and habitable standard.

“I believed it was in good condition and well maintained. It was still perfectly liveable and in fine standards. I don’t think the roof is an issue … There was no sign - no leaks or anything like that - so I think it was in good condition,” he stated.

AFCA said Suncorp had not established that he knew the property was not "in a good condition and well maintained" when he applied for insurance, and said a reasonable person would not have answered "no" to that underwriting question posed by Suncorp’s website.

“The complainant has consistently stated the property was liveable, in good condition and well maintained when he took out the policy. There is no evidence available to show that this was not the complainant’s genuine position,” AFCA said.

“An awareness of the house being old and the presence of overgrown vegetation around the property does not go far enough to establish the complainant knew the property was not in good condition and not well maintained.”

See the full ruling here.