The policyholder had reported a cracking ceiling last September, with subsequent investigations revealing damage in both the lounge room and kitchen. Auto & General first suggested that the damage was due to heavy wind and water ingress, consistent with storm damage covered under the policy, courtesy of rain entering through broken roof tiles.
However, the insurer later revised its stance following an expert report. This assessment pointed to long-term water staining on timber rafters as evidence, arguing the ceiling’s crack was due to the failure of nails or glue, suggesting persistent deterioration rather than storm damage. A second expert report supported these findings. Furthermore, Auto & General backed their reversal with Bureau of Meteorology data indicating minimal rain and wind speeds at the time of incident at a nearby location, casting further doubt on the storm damage claim.
AFCA, however, discerned potential multiple causes for the damage, acknowledging that a storm did impact the area surrounding the property. The authority noted discrepancies in the insurer's evidence, such as the reliance on weather data from a suburb 10km away and the lack of photographic evidence supporting structural failure of the ceiling’s fixtures.
The ruling underscored that the pattern of damage—restricted to certain rooms—was consistent with localised water ingress, rather than widespread structural failure. As a result, AFCA has directed Auto & General to honour the claim. While the insurer had previously waived a $2000 excess, AFCA concluded no additional compensation for distress was necessary, although the complainant had noted significant personal vulnerabilities and distress from the denial.
This decision reflects the essential role of AFCA in upholding consumer rights in the financial sector, ensuring that policyholders are not unfairly disadvantaged. It demonstrates the importance of detailed evidentiary review and consideration of all potential causes in insurance claims.
Looking forward, this ruling might influence how insurers assess and justify claim denials, emphasizing the need for robust justification and accurate data. The outcome is a reminder to policyholders and insurers alike of the critical oversight AFCA provides within the Australian insurance landscape.
