An Australian Financial Complaints Authority (AFCA) panel has awarded a complainant with the option to cash settle or continue with a storm claim after it found his insurer did not appropriately assess the reported damage to his home.

The complainant lodged the claim after his home was hit by a storm and sustained water damage on March 11 last year. He says due to heavy rains, water went through and underneath the property, causing it to sink and leading to floor separation and mould growth. 

The claimant requested IAG cover the damage for the full policy amount of $526,718.  

An insurer-appointed builder who inspected the home concluded there had been no storm-related damage to the property and most identified damage had been pre-existing. The builder noted a “mouldy smell” below the home but did not find any interior mould. 

A second builder supported the findings, highlighting that there had been no evidence that would relate to the sinking of the home, such as tile cracking or dropping of walls. The builder observed a large amount of water ponding in the property’s subfloor and around the house and appointed a restorer to complete safe works. 

The restorer identified mould growth across several rooms in the property, which it says came from a combination of the water underneath and the home being locked up most of the time. It says there had been no evidence that the house had been flooded inside as the walls had been dry. 

IAG informed the claimant that it would not cover the sinking floor because it was not caused by storm-related damage.  

The insurer also declined to cover the mould remediation following a report from an indoor environmental professional, referred to as RIC, who said the mould damage was consistent with “periods of high indoor humidity”. RIC recommended removing skirting boards along the wall panelling to confirm the conclusion, but this was not done.  

The policyholder disputed the insurer’s findings, saying it had inappropriately inspected the property by failing to appoint an engineer to look at the damage. The insurer later confirmed that RIC’s report had been inadequate and recommended an engineer inspect the property. 

The claimant denied the insurer’s request, saying it had completed multiple inspections and should be able to determine the claim based on those reports as well as findings submitted by his engineer, who agreed that the storm had caused the damage. 

AFCA acknowledged that further information “would be preferable to decide the matter” but accepted that the complainant had been frustrated with the handling of the claim and offered the insured two options. 

The first option required IAG to make an $84,700 cash settlement for the cost of repairs, mould remediation and temporary accommodation. The second option allowed the insurer to appoint a qualified structural engineer to determine the cause of damage and what was covered by the policy. 

“Given the insurer’s delays and breakdown in the relationship between the parties, it would not be fair or reasonable on the complainant to allow the insurer to conduct a further assessment which should have been conducted at an earlier time,” AFCA said. 

“As a result, the panel has sought to bring this matter to finalisation based on the information that has been exchanged.

“However, at the complainant’s discretion he has the option to accept the amounts the panel has determined or to allow the insurer to re-attend for a further assessment.” 

“If the complainant accepts the second option, on receipt of the engineer’s report, the insurer is to review its claim decision and settle any storm related damage.” 

Separately, the panel awarded the homeowner $3500 for non-financial losses relating to IAG’s claims handling for “undue levels of stress, inconvenience and delays”. It says the matter could have been handled efficiently if the insurer had appointed a structural engineer to begin with.  

Click here for the ruling.