The Australian Financial Complaints Authority has required RACQ Insurance to increase its liability to a homeowner beyond its sum insured after it found the insurer’s inadequate repairs contributed to mould damage.   

The insurer accepted the storm damage claim in December 2022 and assigned a builder, referred to as ITP, to attend the property and complete repairs. In its report, eight days after the storm, ITP found there was no mould present at the property.  

However, an assessor’s report from January 19 found mould stemming from water ingress in the roof, even after ITP had completed two different make-safe works.   

The complainant engaged with an occupational hygienist, who reported in July last year that there was “significant mould presence throughout the building and contents”. The hygienist says the storm likely caused initial moisture, which led to mould growth in the building’s ceiling.  

The report noted that a lack of ventilation in the home’s laundry and bathroom could also have caused elevated moisture levels. The complaints authority acknowledged that any moisture stemming from poor ventilation would have been exacerbated by the storm.   

The homeowner also relied on a report from a second builder, who found severe defects with ITP’s roof repairs, including incorrect or incomplete part installations.   

RACQ accepted that ITP had been incorrect in its assessment that no mould was present during the initial inspection but says there was insufficient evidence to show the storm caused it.   

The insurer says the contractor did not have the qualifications to identify mould and that its opinion alone was insufficient to establish that the mould was event-related. It requested that an additional mould assessment be conducted to determine its cause.  

But the complaints authority said mould identification was a “key component” of the builder’s assessment process, especially for situations involving water ingress, and formed part of the report’s habitability check list.  

It also noted RACQ had not explained why the mould could not be attributed to the defective repairs.

“I am satisfied, based on the available evidence, there was no mould prior to the event,” the authority said.  

“I am therefore also satisfied, on balance, the proximate cause of the mould was a combination of the storm event and the defective repairs.”  

“On that basis, I do not consider it necessary to conduct any further assessment to determine the cause of the mould.”  

The decision ordered a new scope of works and assessment of the mould remediation costs to be completed. It says the insurer would be liable for expenses beyond the $350,000 insured sum for the home and $40,000 for the contents if the repairs exceed these amounts.  

“Additional repair/rectification work and now the mould remediation is required as a result of the inadequacy of the insurer’s initial repairs,” the authority said.  

“On that basis, it would not be fair to limit the insurer’s liability to those respective sums insured, should the cost to properly finalise all repairs/rectification and remediation arising from this claim exceed those amounts.”  

RACQ was also required to provide the insured temporary accommodation, as the home had become unsafe, and cover the costs of storing and removing contents until the property was repaired.  

Additionally, the complainant was awarded $4500 for non-financial losses caused by the insurer’s mishandling of the claim, which saw several contracted employees steal from the property, as well as delays that exasperated the issue.  

Click here for the ruling.