Auto & General has been told to apologise and pay $2000 compensation to a property owner after it inadequately investigated his storm damage claim before initially denying cover and cancelling his policy.

The Brisbane homeowner lodged the claim after storms in February 2022, and the insurer arranged for a builder referred to as PB to inspect the home.

PB said the property had pre-existing damage and was not watertight. They identified issues with the roof including debris in the gutters, cracks and broken tiles, and an “unorthodox method of installation” that caused water ingress.

The builder said there had been “no claimed event-related damages to the roof” and the storm merely exacerbated existing damage.  

Auto & General denied the claim and cancelled the policy in October 2022, alleging the insured misrepresented the state of his home when saying it was in “good condition” at policy inception and subsequent renewal.  

But the owner said the insurer’s decision was unfair. He obtained a report from a different builder, plus additional written submissions and photographs, showing there was no pre-existing wall or ceiling damage.  

The policyholder said defects noted by PB were due to incomplete make-safe work, and the gutters had been cleaned regularly before the storm damage.

He said storm-related mould had since started to grow in parts of his home.  

Following this submission, Auto & General reversed its claim denial and arranged a cash settlement with the policyholder last October.

However, in a dispute ruling, the Australian Financial Complaints Authority says the insurer must also retract its previous assertion that the man breached his disclosure duty, and provide a written apology. 

The authority notes “several inaccurate assertions made by PB in relation to the complainant having failed to maintain the property in good condition prior to the storms”, which the insured provided evidence to counter.

“I am satisfied the complainant reasonably held a belief that his home was well maintained, in good condition and watertight at the time of policy renewal in July 2021,” the authority’s ombudsman said. “Further, I am of the opinion that a reasonable person in the circumstances would concur with the complainant’s assessment of the condition of his house.

“Consequently, I accept the complainant did not make a misrepresentation. It follows the insurer erred when it decided to cancel the policy.”

AFCA has told the insurer to pay $2000 compensation for non-financial losses because it did not properly investigate the homeowner’s concerns about PB’s findings or the presence of mould, and it failed to complete make-safe work. 

It says the insurer should have sought a second opinion on PB’s report, and due to the claim delays the policyholder and his family suffered unnecessary stress and anxiety. 

Click here for the ruling.