Insurer Penalized for Mishandling Storm Damage Claim

1

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.

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.

Published:Thursday, 23rd Jan 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

ASIC Initiates Legal Proceedings Against Australian Super for Claim Delays

10 Jan 2026: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has initiated legal action against Australian Super, the nation's largest superannuation fund, alleging significant delays in processing nearly 7,000 death benefit claims. These delays, some extending up to four years, have raised serious concerns about the efficiency and fairness of the fund's claims handling processes. - read more

Australian Insurers Face Challenges in Risk Preparedness

10 Jan 2026: Paige Estritori

Recent findings from PwC's Insurance Banana Skins Survey indicate that Australian insurers are trailing behind their global counterparts in preparedness for emerging risks, particularly in areas such as cybersecurity and artificial intelligence (AI). - read more

Insurance News to Host Third Annual Conference in Sydney

10 Jan 2026: Paige Estritori

Insurance News has announced its third annual conference, scheduled to take place in Sydney on March 19, 2026. This full-day event aims to provide attendees with comprehensive insights into current market trends, industry pressures, and emerging opportunities within the insurance sector. - read more

Rising Home Insurance Costs Amid Climate Change Concerns

10 Jan 2026: Paige Estritori

Australians are facing escalating home insurance premiums, with climate change playing a significant role in this upward trend. Insurance Australia Group (IAG) has highlighted that the increasing frequency and severity of weather events are contributing to higher costs for homeowners. - read more

Rural Affinity and Munich Re Strengthen Agricultural Insurance in Australia

09 Jan 2026: Paige Estritori

In a significant development for Australia's agricultural sector, Rural Affinity has renewed its partnership with Munich Re Specialty - Global Markets under a new five-year agreement. This collaboration, which began in 2006, is set to enhance the availability and scope of agricultural insurance products across the country. - read more

Click for more Insurance News