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'Unreasonable': AFCA orders insurer to complete delayed home repair

An Australian Financial Complaints Authority (AFCA) ruling has "compelled" an insurer to complete home repairs within two months, and awarded the claimant $5000 for delays that left his property uninhabitable for more than a year. 

The complainant lodged the claim after his regional NSW home was damaged during catastrophic floods in February last year. Hollard accepted the claim on May 16, about three months after it had been lodged. 

While assessing the claimed damage in April, an insurer-appointed builder, referred to as JL, informed the insured that they could complete repairs within 50 days. However, repairs remained incomplete more than 19 months after the flood. 

The claimant raised multiple concerns with Hollard’s claim handling, saying he had been given “false assurances” about when the repairs would be finished and that he constantly faced difficulties contacting the insurer.

He says the delays caused him and his family to live at several locations while waiting for the repairs and sought compensation for accommodation costs and inconvenience.

Hollard acknowledged that the repairs had been significantly delayed due to an influx of claims, as well as material and labour shortages. It offered the insured $5000 for the delays, but the homeowner declined. 

AFCA accepted that the insurer had been overwhelmed by claims but was not satisfied that the unreasonable delays had been due to “factors beyond the insurer or JL’s control”.

The ruling acknowledged that the works should have been completed by August last year based upon JL’s 50-day promise and that it was unreasonable for the home to continue to be unliveable more than a year after the works were supposed to have been done.

“Ultimately, the complainant’s home repair remains incomplete 19 months after the flood,” AFCA said, “This is unreasonable and excessive.”

“Based on more recent information the parties provided, it appears there may be further variations to the repairs that may result in further delays.

“In addition to the significant delays, the insurer’s poor management of the home’s repair caused the complainant and his family to be displaced from their home for longer than was necessary. I accept this caused them unusual inconvenience and interference.”

AFCA required Hollard to “take all necessary steps to complete the home’s repair” within two months of the determination. It agreed that the $5000 compensation offered by the insurer was fair and awarded it to the complainant. 

The ruling also considered the claimant’s appeal to receive compensation for the costs of Sydney accommodation where he says he has been living due to the status of the home. 

But Hollard disputed that it was required to cover the accommodation, noting that the insured worked in Sydney and regularly stayed at locations in the area to avoid a 14-hour commute. It says the claimant failed to provide any proof of rental payments or rental agreements to show that the damaged status of his home caused the alternative accommodation costs. 

AFCA accepted that the insurer was not required to reimburse the costs until the complainant provided “satisfactory proof of loss”.

“The complainant’s statutory declaration suggests he rents a Sydney room on a month-to month basis, at $800 a month,” AFCA said.

“However, he has not supplied any supporting information showing he was paying this amount monthly.

“Even if I accept the complainant was paying $800 monthly, the exchanged information supports he was already incurring alternative accommodation costs because of his work situation.

“Given this, it cannot be readily discounted he might be incurring such costs because of his work situation, whether his home was unliveable or not.”

Click here for the ruling.