A strata insurer failed to carry out mould remediation in accordance with accepted standards, leaving a property contaminated and its vulnerable occupants without temporary accommodation for more than a year after storm damage, the industry ombudsman has found.

The Australian Financial Complaints Authority has ordered Chubb to cover the full cost of remediation and repairs, pay $92,120 for 28 weeks' temporary accommodation, and provide $18,900 in compensation for non-financial loss as “its claims handling caused severe strain and inconvenience”. 

“The insurer has admitted that the claim was mishandled and the complainants should have been placed in temporary accommodation sooner,” the ruling said. 

AFCA found the relationship between the parties had deteriorated during the prolonged claim, to the point where the complainants rejected a settlement of more than $375,000, which the insurer considered generous. The policyholders wanted further expert assessment to establish whether that sum would cover the necessary repairs.

The complainants, who own a unit and are beneficiaries under a strata insurance policy, lodged a claim after the Christmas Day 2023 storm. They were away and returned home in January 2024 to find roof damage and water pooling in the kitchen and living areas. 

Although the complainants reported health issues linked to mould exposure and requested temporary accommodation in April 2024, the request was declined. They eventually moved into temporary accommodation on February 22, 2025, more than a year after the claim was lodged. 

AFCA found the insurer’s restoration and mould clearance work inadequate. Testing relied on just two indoor air samples taken while air scrubbers were operating, without surface, cavity or subfloor sampling.

An independent hygienist later recorded mould levels of up to 120,000 spores per cubic metre in the lounge, widespread mould in rooms and cavities, and high moisture in ceiling framing. Chubb’s own building consultant subsequently found visible mould in the lounge ceiling cavity and recommended replacing the ceiling and fittings.

AFCA found Chubb must cover all building damage from the original storm and a subsequent Cyclone Alfred event in March 2025, which it determined was a separate insured event. The insurer must manage both claims together. 

Chubb must provide three independent structural engineers for the complainants to choose from to prepare an updated scope of works covering mould remediation, clearance testing and structural repairs. 

It must then obtain a quote and pay the repair costs, plus a 30% uplift for contingencies and the risk of mould continuing after repairs. Interest is payable from April 14, 2025. 

AFCA also ordered Chubb to reimburse up to $10,000 in expert costs and pay $3600 for contents remediation and testing. It says the claimants have established they were "in a vulnerable situation", with one suffering from chronic immune illnesses.

Click here for the full ruling.