Insurer Penalized for Mishandling Storm Damage Claim
Insurer Penalized for Mishandling Storm Damage Claim
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
In a recent development, Auto & General has been instructed to both apologize and compensate a Brisbane property owner with a $2000 payment after an inadequate review of his storm damage claim led to an initial denial of coverage and subsequent policy cancellation.
The homeowner reported his damages following severe storms that hit in February 2022. The insurance company consulted a builder, referred to as PB, to evaluate the property damages.
PB's assessment claimed that the home had pre-existing damage and lacked waterproof integrity. Specific issues highlighted included clogged gutters, cracked and missing roof tiles, and an unconventional roofing method that permitted water intrusion.
According to PB, the storm did not directly damage the roof but worsened existing issues. This led Auto & General to deny the claim and revoke the policy in October 2022, accusing the homeowner of misrepresenting the property's condition as "good" when the policy began and during its renewal.
The homeowner contested the insurer’s stance, arguing that it was unjust. He presented a separate builder’s report, along with written statements and photographs, which demonstrated a lack of prior wall or ceiling damage.
The policyholder attributed the defects cited by PB to partial make-safe work, asserting that the gutters had been regularly maintained prior to the storm. He also mentioned the emergence of storm-induced mold in sections of his home.
While Auto & General did ultimately reverse its initial claim denial and arrange for a cash settlement the preceding October, the Australian Financial Complaints Authority (AFCA) has decreed that the company must retract its claims of disclosure breach and issue a formal apology.
The AFCA identified “multiple erroneous assertions by PB alleging the complainant had neglected to maintain the property appropriately before the storm,” for which the homeowner provided contradicting proof.
The authority’s ombudsman commented, "I am satisfied the complainant reasonably believed that his home was in good condition and waterproof at the time of policy renewal in July 2021. Moreover, I think a reasonable person would agree with the complainant’s evaluation of his home's condition."
They further stated, "I conclude that the complainant did not misrepresent the property's state. Thus, the insurer made a mistake in deciding to cancel the policy."
The insurer has been directed to pay $2000 to cover non-financial losses due to its oversight in investigating the homeowner’s challenges to PB’s report, failure to acknowledge present mould, and incomplete make-safe actions.
The AFCA concluded that Auto & General should have sought a second, independent evaluation of PB’s findings. The resultant protracted claim process subjected the policyholder and his family to undue stress and anxiety.
The original source of this matter was reported by the Insurance News.
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
The latest severe weather messaging from insurers and emergency agencies is a timely reminder that storm, flood and cyclone exposure should be front of mind for strata committees heading into the warmer months. While the warning is aimed broadly at property owners, it carries particular weight for apartment buildings, townhouse complexes and mixed-use schemes, where one weather event can affect shared structures, common services, multiple lots and long-term levy planning. - read more
Australia's latest insurance affordability signals are a timely reminder that premium pressure is not confined to detached homes. For strata communities, the same forces affecting household insurance, including natural hazard exposure, higher repair costs, reinsurance pricing and insurer risk selection, can be amplified across an entire apartment building, townhouse complex or mixed-use scheme. - read more
Australia's latest construction cost signals suggest some relief from the sharpest building inflation of recent years, but strata committees should be careful not to treat moderation as a reason to relax their insurance settings. For apartment buildings, townhouse complexes and mixed-use schemes, the key issue is not simply whether costs are rising more slowly. It is whether the current sum insured still reflects the realistic cost of reinstating the entire property after a major insured event. - read more
New South Wales strata communities are entering a more demanding insurance governance environment, with reforms placing greater emphasis on disclosure, quote processes and the way insurance-related benefits are explained to owners. For committees and owners corporations, the change is less about paperwork for its own sake and more about improving confidence that the building's cover has been tested properly before renewal decisions are made. - read more
New South Wales strata communities should keep a close watch on renewed efforts to reform the way emergency services are funded through insurance premiums. The long-running concern is that adding emergency services charges to insurance bills can make cover look more expensive, particularly for apartment buildings, mixed-use schemes and larger owners corporations already managing high rebuilding values and complex risk profiles. - read more
Strata insurance is a specialized type of insurance designed to cover multi-unit properties like apartment buildings and townhouses. It protects the common property and the shared interests of all owners within the strata scheme, offering coverage for facilities like pools, gardens, and shared structures. - read more
Strata insurance is a type of cover designed specifically for properties that are subdivided into individual lots or units, which is common in residential and mixed-use developments. It protects the overall structure and shared areas of the property and is usually managed by a strata management body. This insurance is crucial not just for safeguarding the building itself but also for ensuring that common property, such as gardens, hallways, and balconies, is covered against a range of risks. - read more
Strata insurance is generally a legal obligation for Australian strata schemes, but the exact requirements differ between states and territories. This guide explains how obligations commonly work, what committees and owners should check, and why scheme type, location and policy wording matter. - read more
Commercial and residential strata insurance both protect strata-titled buildings and common property, but the risks, policy considerations and information insurers assess can differ significantly. - read more
Strata insurance is a type of insurance designed specifically for properties that are managed under a strata title scheme. This typically includes multi-unit developments like apartments and townhouses. It covers common areas, such as gardens, hallways, and swimming pools, and provides protection for the owners' corporation against various liabilities and risks. - read more
Knowledgebase
Reinsurance: Insurance that an insurance company purchases from another insurance company to mitigate risk.
No comments yet. Be the first to share your thoughts.