Homeowners whose property was inundated by water will be covered for their losses after a dispute ruling determined that stormwater, not floodwater, was the initial cause of damage.

The complainants lodged a claim with Auto & General after their home and garage were hit by storm and flood waters on February 27 last year. The property owners held a home and contents policy that included cover for damage from stormwater but not flood cover.

The claimants described “a period of sustained, significant rainfall,” which overwhelmed the drainage systems and resulted in a pooling of rainwater that inundated the property.

Auto & General agreed that the damage to the garage, which sat lower than the home, was caused by stormwater but argued the inundation of the rest of the property was caused by floods that occurred on the same day as the storm.

An insurer-appointed hydrologist said the initial and peak overflowing of the home was caused by floodwater from a nearby creek.

He acknowledged exceptional rainfall intensities, which posted an Annual Exceedance Probability (AEP) of 1 in 1700, also noting peak recorded water levels were near a 1 in 2000 AEP flood level.

The hydrologist said the timing of the home's inundation corresponded with the peak of recorded flood levels and contended that the stormwater “could not have reached sufficient depth to inundate the floor level of the house”.

The Australian Financial Complaints Authority (AFCA) panel acknowledged the hydrologist’s findings, and accepted the peak level of water in the home was 0.22m above floor level, but said the key factor in the dispute was determining what caused the initial inundation.

It said that the data used in the hydrology report was “vague” and suggested that the flooding occurred sometime between 3pm to 3:30pm despite photographs submitted by complainants showing water entering the home at 2:44pm.

“While the panel accepts this is not necessarily an indication the inundation was not flood, it does indicate the inundation occurred before the hydrologist considers inundation would have occurred from CT creek,” the panel said.

The complainants questioned whether the creek waters had overtopped the property’s banks at 2:44pm, which the hydrologist could not confirm.

The panel determined that it was fair to accept that the initial inundation up to a height of 100mm above floor level was due to stormwater and required Auto & General to accept the claim for the associated damage.

The homeowners provided a builder’s quote for home repairs for $297,102, which the panel viewed as “excessive, even for damage to a height of .22m above floor level”. It required the insurer to appoint an engineer to prepare a scope of work and a builder for an actionable quote for the repair costs.

The ruling allowed the insurer to cash settle the building damage based on the new quote and a 10% uplift to cover contingencies.

Auto & General was also required to cover costs associated with damaged contents, which the complainants listed as totalling $69,692. The panel accepted that some of the items listed were likely not damaged by the covered event and reduced the sum to $23,200.

The determination also awarded $2000 to the claimants for non-financial losses relating to the “physical and psychological impacts,” of the claim, noting that the owners could not occupy their home until it was decontaminated.

It said that the homeowners and their children “endured a very difficult and challenging experience, made worse by the insurer’s handling of the claim”.

Click here for the ruling.