A homeowner has won a dispute over a landslip and property damage caused by Cyclone Alfred after arguing her insurer failed to provide a practical pathway for completing repairs.

Blue Zebra accepted the claim lodged in March last year and offered a cash settlement of $161,128 based on estimates for repairs to be done after work outside the cover was complete.

The insurer said the policy did not respond to broader land reinstatement, slope stabilisation or geotechnical remediation.

The complainant provided geotechnical and engineering reports that found the cyclone caused the slope failure and the site remained unstable. She argued the settlement relied on “a theoretical method” and did not show how repairs could be safely completed and certified.

She also said the final scope did not address earlier recognised damage to the sewer, potable water and associated services.

Storm landslip damage within 72 hours of a trigger event was included in the policy, while retaining walls were excluded if in poor condition, incorrectly constructed or non-compliant.

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The Australian Financial Complaints Authority says it is not satisfied the insurer’s settlement proposal “fairly or reasonably reflects” the intended scope of cover.

Support and enabling works are integral to reinstating the cyclone damage – which is different from requiring payment for unrelated land improvement or stabilisation works – and there is no clear evidence of pre-existing instability, wear and tear, or lack of maintenance, it says.

“I consider an insurer-managed repair is a fair outcome,” an AFCA member said. “This is because the insurer has not demonstrated its proposed cash settlement is actionable and adequately addresses all the works required to repair the cyclone-related insured damage.”

Blue Zebra has been ordered to engage an independent geotechnical and/or structural engineer to prepare a new scope of works. The parties may agree to a cash settlement, subject to a 15% uplift for the transfer of repair risk.

The policyholder will also receive up to $5000 reimbursement for expert reports and $4500 compensation for non-financial loss.

Temporary accommodation was not a policy benefit, but the ombudsman says a temporary ensuite provided as a hardship measure was unfairly removed while the claim was unresolved, with the complainant lacking clarity about the repairs for an extended period.

“The insurer’s changing position on sewer and potable water services prolonged uncertainty about what was covered and how the property would be reinstated,” AFCA said.

See the ruling here.