Flawed flooring costs insurer as AFCA backs claimants
The industry ombudsman has ordered Hollard to increase its settlement and pay compensation to claimants after carrying out inadequate house repairs.
The homeowners lodged their claim after a February 2020 storm, and the insurer accepted it that May.
However, covid-related delays meant the Hollard could not offer a scope of work for repairs until its builder reinspected the property in September 2022.
Shortly after the builder installed new timber flooring in May 2023, the claimants noted it was “cupping” – the edges rising higher than the centre.
The builder said this was caused by moisture in the subfloor, stemming from water seepage, poor ventilation and inadequate drainage.
The Australian Timber Flooring Association, which the builder consulted, said work was needed on the home’s ventilation and drainage systems.
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The builder proposed a new scope of work, costing $13,198, “for re-sanding and polishing the cupped new flooring”, but it did not address the cupping, attributing this to moisture issues.
Hollard offered a cash settlement based on this scope of work, with a 20% uplift.
The homeowners rejected the offer, arguing the cupping occurred because the builder installed the flooring too quickly, without allowing for acclimatisation.
They engaged their own builder, which quoted $30,794 for flooring repairs.
Hollard’s builder said its floor installer had advised the usual two- to three-week acclimatisation period was not required.
The Australian Financial Complaints Authority says the builder inadequately installed the flooring.
While subfloor moisture may have been a “contributing factor in the cupping”, the onus was on the builder to check for this, but it did not.
The decision requires the complainants to obtain two quotes for rectification of the work, on which Hollard should cash settle.
Hollard must also cover future temporary accommodation costs and pay the homeowners $4000 each for “unsatisfactory” claims handling that caused “significant and ongoing disruption to the complainants’ lives”.
See the ruling here.