Homeowners who sought cover for extra costs after their burst pipe claim was settled have lost their bid before the dispute authority but have won compensation for their insurer’s delays.  

Their December 2022 claim was accepted by insurer Youi, which ended up making a cash settlement after repair work was abandoned last August – about 20 months after lodgement.

The settlement covered finishing repairs to the home’s bathroom, plus temporary accommodation costs.

The insurer said delays were caused by its appointed builder, which was unaware of the extent of repairs required.  

It told the Australian Financial Complaints Authority it was concerned about the time taken on the claim and “chased the builder”.  

In its dispute decision, AFCA notes Youi’s efforts but says it was “ultimately responsible” for the claim delays, which distressed the policyholders.  

The claimants argued the insurer should also pay for additional expenses incurred relocating furniture and carpets, plus hygienist fees.

And they flagged the insurer’s failure to provide temporary accommodation while the bathroom was being stripped out.  

Their home had a second usable bathroom, so temporary accommodation was not offered, AFCA says. But that bathroom had a shower leak that caused further damage to the property.  

The policyholders said Youi was aware of that leak but refused to act.  

The insurer said it was only made aware of the problem last May, when the claimants raised it, and that the loss was excluded because it was a shower leak.

Alternative accommodation was then sought, “although there were delays due to a lack of a suitable location to meet the complainants’ needs”, AFCA says.

The authority acknowledges the homeowners’ difficult circumstances but says the available information does not show the additional costs were claimable under their policy.  

“Unfortunately, the complainants have not provided sufficient evidence to establish that the costs of a hygienist, cleaning, relocation of contents or furniture were incurred by them.  

“Further, none of the exchanged documents establish that such costs relate to the burst pipe and not to the subsequent water damage that occurred at the complainants’ property.”  

AFCA accepts the insurer’s exclusion of shower leaks and says factors related to the claimants’ circumstances contributed to difficulties finding suitable housing.  

It has awarded the maximum amount of compensation for non-financial losses – $6300 – to both complainants for the delays.

This adds to $27,000 Youi has already paid “to compensate the complainants for their claim experience”. 

See the ruling here.