A property owner’s payout for loss of rent has been reversed after the dispute authority found its claim was fraudulent.

The claimant, a beneficiary under an owners’ corporation residential strata plan, lodged claims for water damage and rent loss after a storm in January 2022.  

It said the lot was rented to a company as a conference facility for $3300 a month, but the water damage meant it could not be used.

Insurer QBE accepted the water damage claim and paid $11,684 cash.  

The insurer initially declined to cover loss of rent because it did not consider the lot unfit for occupation. But, after an internal dispute resolution review, it agreed to cover losses from January to October 2022, making a total payment of $31,818.  

However, the owners’ corporation raised concerns with the insurer about the rent loss claim’s validity, and further investigations began.  

The insurer said the claimant provided a formal lease agreement that was said to have been signed on October 1 2021 and started that October 21. This was nearly six months before the tenant was registered as a company.

The claimant’s director later conceded the written lease agreement was created and signed with the incorrect date about the time the claim was lodged. He said the earlier rental had been agreed verbally and the document was made later because he believed the claim would fail without it.  

There was a rental ledger showing the tenant company paid rent in October, November and December 2021, but the director later admitted no rent had been paid and the ledger had been created under the belief “the claim would not be paid unless some rent had been received”.  

QBE said the director’s false statements were “made to try and convince the insurer of an entitlement”, and this allowed it to refuse the claim and recover all payments, plus costs, amounting to $46,830. 

The claimant – which took its case to the Australian Financial Complaints Authority – denied fraud. It said the written agreement was made to ratify the verbal one, and the director made a mistake on the rent ledger by showing sums paid that should have been shown as owing.  

It said the ledger issue was careless but was not intended to deceive the insurer.  

AFCA says the claim for rental loss was fraudulent.  

“The complainant misrepresented that a written lease was in place from October 2021 and that rent had been paid in October, November and December 2021,” an authority ombudsman said.  

“The date of execution recorded in handwriting on the written lease was October 1 2021, despite it in fact being drafted and signed about six months later.  

“The rental ledger unequivocally recorded rent as paid with the date paid also recorded. I am satisfied those documents were deliberately prepared with the intention of deceiving the insurer.”

AFCA says the rent loss claim made up about 75% of the total payout and it is fair for the insurer to recover the payments.  

Click here for the ruling.