The Australian Financial Complaints Authority has told RACQ Insurance to pay a homeowner couple compensation for stress-related damages caused by its failure to adequately investigate contamination in a fire-damaged kitchenette.

The homeowners lodged a claim with the insurer for fire and smoke damage after their e-scooter’s lithium-ion battery ignited while being charged.  

RACQ Insurance accepted the claim and paid out $323,000 for contents and $67,088 for temporary accommodation costs – which was above the policy’s benefit limit.

The insurer also attended to restoring the home’s kitchen and kitchenette. During the work, it appointed a hygienist who tested for heavy metals, identifying elevated copper and nickel levels. After a second assessment in June last year, the hygienist said the surfaces had been “cleaned to a satisfactory level”.

But the couple told AFCA the insurer inadequately investigated and remediated the areas and they remained contaminated by toxic heavy metals from the battery.

They said the insurer’s restorer confirmed “extensive lithium battery contamination by fire-related residue”. And they questioned the hygienist’s findings, noting he did not have expertise in lithium battery fire claims. 

The complaints authority says the insured’s complaints are valid and the insurer “did not complete adequate heavy metal testing in the kitchenette”; it failed to take samples from external locations such as the benchtop and did not test for mercury. It says the inspection of the main kitchen was appropriate. 

The authority says the insurer would have been required to arrange additional heavy metal testing of the kitchenette if the complainants had not already replaced the area. 

AFCA says uncertainty about the kitchenette’s remediation caused the claimants stress, and the additional work they took on led to them unnecessarily disposing of sentimental items inherited from dead relatives.

It finds the insurer’s poor investigation of the kitchenette “significantly contributed to a worsening of [the couple’s] mental health”, and it should pay $3000 to each complainant.

The claimants also wanted RACQ Insurance to pay additional temporary accommodation costs, saying it wasted “a minimum of 10 weeks” of their entitlement due to investigations “aimed at avoiding having to replace the kitchen and kitchenette”. 

But AFCA has rejected this, noting the insurer has already paid “well over” the policy’s limit for temporary accommodation. 

Click here for the ruling.

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