Chubb must cover more than $60,000 of lost rent and pay compensation to a strata property owner after black mould left his unit uninhabitable for more than two years.

When a previous claim for storm damage was being investigated in December 2023, water damage and mould were found in a laundry area, caused by a leak in the neighbouring unit’s washing machine.

The property owner lodged a claim for the mould – which was also found in the unit’s kitchen and lounge room – in June 2024.

Chubb agreed to cover the damage and made a cash settlement in September last year, but it tried to limit cover for loss of rent to the repair period only – September to December last year.

It cited an exclusion for damage caused by “mildew, mould, wet or dry rot”, but in a dispute ruling, the Australian Financial Complaints Authority says this does not apply because the mould was caused by the washing machine leak, which was covered.

The insurer also argued the owner’s delay in submitting a claim allowed the mould to spread and violated the policy’s requirement for “prompt notification” to mitigate loss.

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The ombudsman says the owner could not have known of the mould before December 2023 because no one was renting the property after July of that year.

It notes there is no evidence the mould worsened after it was discovered.

The claimant said Chubb should cover loss of rent – $600 a week – for the two years his property was uninhabitable, plus utility fees, body corporate levies and mould report costs.

AFCA says the policy covered loss of rent “from the time of the physical loss until the lot is re-let following completion of reinstatement. It is fair the loss of rent payment accounts for the time taken to put the complainant in a position to do the repairs.

“The insurer did not finalise the remediation settlement until late September 2025. The complainant could not do the repairs before this time.”

The insurer should cover utility and body corporate costs up to the policy’s $2000 limit, and pay $811 for the mould reports. It does not have to pay for “increased renovation costs” because the parties agreed to cash settlements and “delays in repair were not primarily caused by the insurer”.

Chubb must pay $3000 compensation for mishandling of the claim, with AFCA noting its failure to implement make-safe works or send an assessor to evaluate the mould, “despite this being central to the loss of rent dispute”.

See the ruling here.