A homeowner whose property was damaged after being inundated with water will not be compensated after a dispute ruling backed her insurer’s decision to decline the claim.

The complainant lodged the claim after a storm damaged the home. IAG did not dispute that the building had been damaged but said water entered the property due to structural defects and non-compliance with building standards, which the policy excluded.

The insurer appointed a roof plumber and builder to assess the damage, who identified faults with the building’s rain head and box gutter above areas affected by the flooding.

The roof plumber said the rain head had bird deterrents installed that caused blockages and eventual overflowing of water, leading to the home being damaged.

The Australian Financial Complaints Authority (AFCA) acknowledged the findings from the insurer’s experts and said that non-compliance with proper regulation would be applicable grounds to decline the claim.

However, AFCA said that the insurer must show that the claimant had been aware of the issues if it was to rely on them.

“In my opinion, if the building code has changed after the construction of the property, this is not a fault of the complainant and the insurer is not entitled to rely on the non-compliance exclusion.”

But IAG said the homeowner had knowledge of the overflow issues to the property since 2020 after she filed a different claim that year for storm damage.

The insurer’s builder, referred to as UB, said they had informed the complainant in 2020 that the roof needed maintenance work and an emergency overflow to be installed to comply with regulatory standards.

The complainant said that she paid UB to complete maintenance work, including installing a compliant water spreader to the downpipe.

AFCA acknowledged that the policyholder took steps to fix issues impacting repairs in 2020 but said there was “no persuasive evidence” to show that she addressed the overflowing issues that UB had identified.

It said the available information could not establish the storm as the likely cause of the damage.

“Whilst there is no dispute there was a storm event and water has entered the property, I am not satisfied it has entered due to a storm-created opening,” AFCA said.

AFCA noted that it disagreed with the insurer’s assessment that the roof’s gutters had been non-compliant with standards but said that the claimant was aware of the required maintenance works.

“I accept, had the complainant taken reasonable steps in addressing the overflowing issue following the 2020 claim, the loss would arguably have been prevented,” AFCA said.

The insured said IAG had incorrectly assessed the 2020 storm claim and failed to correct the related damage. AFCA stated there was no information to show that this was the case and that if it had been true, it would not have supported her current claim.

“The overflowing issues were not detrimental to the March 2020 repairs,” AFCA said.

“The insurer says it brought the issues to the complainant’s attention however was not a defining factor in the 2020 claim.”

“Even if I accept the complainant’s argument (which I do not) that the insurer’s communication in 2020 regarding the lack of maintenance has been poor, the exchanged evidence shows the insurer emailed the complainant all the relevant reports and its findings in 2020.”

The ruling said that the insurer’s decision to decline the claim was in line with the policy’s exclusions regarding inadequate maintenance work.

It required IAG to award the complainant $500 for non-financial losses related to poor communication and delays in its claims handling.

Click here for the ruling.