A homeowner who had to stay in her mould-infested home after a storm-damage claim had been denied has won her dispute against the insurer.

The complainant lodged a claim with Auto and General after a series of heavy rainfall events in early March last year caused excessive damage to her home.  

The claimant said water had entered through storm-created openings in the kitchen and bedroom ceilings, damaging items before causing mould to appear shortly after. 

Auto and General initially agreed to cover the damages related to the storm and placed the insured and her two children in temporary accommodation. However, months after accepting the claim, the insurer reversed its decision, determining that the damage had stemmed from a gradual deterioration of the property’s condition and excessive moisture underneath the home.  

The complainant heavily criticised Auto and General’s decision, telling the Australian Financial Complaints Authority (AFCA) that she had to return to her unsafe home, which continued to be affected by mould, as she had nowhere else to stay.

A complainant-appointed builder who set up make-safe repairs over the ceilings of the affected rooms reported that water leaked into the home through ridge beddings, with a second builder’s report noting mould “all over” the front eaves of the roof.  

The report also noted “excessive moisture damage” in the main bedroom of the building but found that the property’s sub-floor ventilation had been “adequate for 60 years,” barring the storm event. 

Auto and General engaged with experts to inspect the property almost six months after the event occurred. A builder, referred to as RC, reported the building’s downpipe had been “inadequate” and said this was why water overflowed the gutters and flooded the eaves. 

RC noted that the roof had no sarking or insulation to capture the leaking water and identified this as a cause for the water ingress.  

The builder attributed the mould growth to moisture observed on the subfloor walls, as well as limited ventilation and high humidity levels in the home. However, an inspection from the insurer’s internal assessor failed to find any moisture or mould growth in the building’s subfloor. 

AFCA said that the complainant had sufficiently pointed to the impacts of the storm for it to be acknowledged as a claimable loss and challenged the insurer’s findings that the damage had been pre-existing.  

“Photos provided by the complainant show no evidence of mould damage in the home prior to the storm event,” AFCA said. 

“Whilst this does not prove there was no mould in the home, the insurer did not have an expert inspect the home for more than six months after the storm event.” 

“The insurer says mould came from the subfloor area but has not shown how this developed or why this mould was extensive through the ceiling areas of the home.”  

The ruling acknowledged findings that raised several explanations for the cause of water damage but sided that likely outcomes were related to the severity of the storm event. 

AFCA agreed the roof’s lack of sarking and insulation left it “vulnerable” to water seepage but said these issues had not caused any problems to the home over its 60-year lifespan.

“There are multiple possibilities for how water could have entered the home,” AFCA said.

“Amongst these is wind driven rain and/or the possible movement of tiles. Either possibility is consistent with an opening created by the storm.”  

“Whilst I acknowledge gradual deterioration is present, this is due to the water damage turning to mould. Mould then spread through the home.” 

“I consider this would not have occurred if the insurer had responded promptly to the claim. There is no persuasive evidence that gradual deterioration is responsible for water ingress into the home.” 

AFCA required Auto and General to accept the claim and ensure the home is remediated from mould damage to its pre-loss state. The insurer was not required to address damages caused by structural movements.

The ruling also determined Auto and General cover temporary accommodation costs for the complainant and her family and award her an additional $1500 for non-financial losses on top of the already provided $2000.  

Click here for the ruling.