A homeowner who says last year's Victorian earthquake caused damage to her home will be partially covered by her building insurance after a dispute ruling.

An Australian Financial Complaints Authority (AFCA) determination found that the 5.9 magnitude quake on September 22 likely created cracks in the interior plaster of the building but denied the homeowner’s claim that it made ceiling linings collapse.

Youi said the poor state of the roof caused water ingress and deteriorated the ceiling, and that cracking was driven by other ground movements unassociated with the earthquake.

The complainant lodged a claim on the day of the earthquake and, on October 1, contacted Youi to say that the ceiling fell following torrential rain.

The next day a Youi-appointed builder identified holes in the roof that allowed water to seep through and cause lining boards to sag.

Youi assigned a structural engineer, referred to as CRD, on October 8 to inspect the damage done to the property.

CRD said that the deteriorated condition of the roof allowed moisture to enter the timber ceiling linings and drove the ceiling to collapse.

They also noted hairline cracks to the ceiling plaster and wall plaster in several parts of the house but said that this type of cracking was understandable given the age and material of the building.

The claimant admitted to the home's pre-existing wear but said the earthquake greatly exacerbated the cracks and damaged other intact parts of the house.

The engineer’s report said that while the earthquake highlighted previous issues with the home, it was not the proximate reason for the damage.

AFCA said that the insurer failed to provide significant proof to substantiate its suggestion that other factors caused the interior cracking.

It noted that CRD did not complete any soil tests or inspect the footing to indicate that other ground movement generated the damage.

The ruling determined that the intensity of the earthquake, as highlighted by CRD’s report, was strong enough to cause the cracking the owner claimed and that Youi was required to cover the costs.

AFCA did agree with the insurer’s assessment of the ceiling deterioration and said it was more likely that other factors led to the damage.

Click here for the full ruling.