A family has won a substantial payout and compensation for claim handling errors after home insurer Youi failed for seven months to record that one of their children was disabled or to allocate a priority assistance team.

The insurer must pay $84,322 for building costs, $4000 compensation for stress and inconvenience, and cover four weeks of temporary accommodation, the Australian Financial Complaints Authority has ruled.

Youi was told in March 2024 the child was disabled. It admitted it should have recorded this on the claim immediately but did not do so until the following November.

The family said moving out of their damaged home was especially difficult because another of their children also had disabilities and maintaining treatment became difficult.

“The insurer made errors that exacerbated the complainants’ stress and inconvenience,” AFCA said, noting the industry code requires extra care with vulnerable customers.

“The complainants moved out of home while the insurer arranged restoration work. They had to move out of their home a second time because the work was not done correctly.”

The family lodged their claim when a flexi-hose leak under a sink flooded their kitchen, lounge, dining room, three bedrooms and laundry.

Youi accepted the claim but would not pay to replace “drummy” tiles – those that make a hollow, drum-like sound because of weak adhesive.

Related article: Insurer must pay for airline’s visa ‘accident’

It said the tiles were drummy because of faulty installation, not the flooding. It offered $22,632 and two weeks’ accommodation, plus $2000 compensation and counselling sessions, admitting it was responsible for delays.

The customers rejected this and took their case to AFCA, seeking $79,000 and three to five weeks’ accommodation costs.

AFCA says Youi acted reasonably by using experts to assess the tiles but failed to explain why matching ones in unaffected areas of the house were not drummy.

“The floor tiles in the front of the house match the floor tiles in the back of the house, and were installed using the same methods. The complainants say that if the tiles became drummy because of the method of installation, this would have occurred at both ends of the house. The insurer has not commented on this,” the ruling says.

In April 2024, Youi said the family could move back into their home. When the insureds said uncovered concrete floors were not safe for their children, Youi suggested covering them with cardboard or corflute, which “disgusted and devastated” the policyholders.

Later tests revealed moisture issues, and a Youi note dated May 2024 said its restorers should have removed skirting boards and drilled holes in kick boards to facilitate drying.

That August, Youi failed to reply to an email from the customers due to a technical issue.

AFCA has doubled Youi’s compensation offer, so it must pay $4000. The initial unsuccessful work, further restoration and mould testing “was especially stressful” because of the children’s disabilities, it says.

The $84,322 repairs payout is based on a Youi-appointed builder’s quote a few weeks after the flood that included tile replacement.

See the ruling here.