Insurer rapped over payout to vulnerable mother
RACQ Insurance must increase a house fire payout to a vulnerable customer after the complaints authority found flaws in its claim handling.
The policyholder lodged her claim in October 2023 after scented candles caused a bedroom fire and smoke damage.
She said she and her children had returned from a holiday and lit the candles to rid the home of a “musty” smell.
The woman told the insurer she had a disability, as did her children, and her case was assigned to the company’s “hypercare” team. RACQ Insurance also arranged emergency accommodation.
The insurer accepted the claim and appointed a builder, who completed work last May. It also made a $39,074 cash settlement for damaged contents.
But the claimant questioned the repairs’ quality, noting issues including ceiling damage, poor paintwork and protruding nails in floorboards.
A consultant she engaged recommended the builder provide quotations for replacement of the kitchen ceiling, make-safe work on the nails and sanding of timber floors.
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The insurer’s assessor agreed further repairs were required but said most of the damage identified related to wear and tear or natural ground movements. RACQ offered an additional $7949 for repairs, but the claimant rejected this, saying the work would cost more than $130,000.
In its dispute decision, the Australian Financial Complaints Authority says it is not convinced the complainant has shown there is “any further event-related damage or remedial repairs for which the insurer has not already accepted liability”.
But it finds RACQ Insurance’s additional settlement failed to account for replacement of the kitchen ceiling. It says the insurer should obtain a quote and pay for this.
It must pay the $7949 already offered, with a 20% uplift, and pay an additional $1500 for toys that were unaccounted for but probably destroyed by the fire.
AFCA has also told RACQ Insurance to pay $4500 compensation for its handling of the claim, noting many damaged items were not included on the original scope of works or appropriately fixed. It says this caused unnecessary delays and stress.
See the ruling here.