Insurer Penalized for Mishandling Storm Damage Claim

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

Share this news item:

Insurance News

AustralianSuper Announces Substantial Insurance Premium Increases 25 Apr 2026: Paige Estritori AustralianSuper, the nation's largest superannuation fund, has informed its members of impending increases in insurance premiums, set to take effect from May 30, 2026. This development is particularly noteworthy for those holding life, total and permanent disability (TPD), and income protection insurance through their superannuation accounts. - read more

Insurers Push to Extend Rebate for Low-Income Seniors 25 Apr 2026: Paige Estritori Health insurers are calling on the Australian government to exempt low-income seniors, including those on the Age Pension, from the proposed changes to the Private Health Insurance Rebate. The concern is that requiring these individuals to pay hundreds of dollars more each year to maintain their private health insurance could lead some to downgrade their coverage or abandon it altogether. - read more

Marine Insurers Maintain Support Amid Middle East Conflicts 25 Apr 2026: Paige Estritori The International Union of Marine Insurance (IUMI) has recently highlighted the resilience of marine insurers in the face of escalating conflicts in the Middle East. Despite the challenging geopolitical landscape, insurers continue to provide essential coverage for cargo, hull, liability, and offshore energy sectors, ensuring that global trade flows remain protected. - read more

Rising Insurance Premiums and Declining Profits in Australia 25 Apr 2026: Paige Estritori Recent findings from KPMG's annual review of the general insurance industry reveal a concerning trend for Australian businesses: insurance premiums are on the rise, while industry profits are experiencing a downturn. This development is largely attributed to the escalating costs associated with natural disasters. - read more