Homeowners who sought a payout for wall crack damage have won a claim dispute after the complaints authority rejected their insurer’s applied exclusions.

The claimants said they noticed the cracks in February 2022 and approached Allianz to have repairs covered under their policy’s accidental damage benefit.  

But the insurer said the damage was not covered, citing exclusions relating to gradual deterioration, structural defects and ground movement.  

Allianz’s engineer said the cracks probably occurred because of tensile stress in the brickwork that had grown after the removal of load-bearing walls and underpinned steel beams during renovations in 2002. The insurer also referred to another expert who said the alterations left the structure “extremely sensitive to changes in loading conditions”.

But the claimants’ appointed engineer said the renovations in 2002 were carried out to appropriate standards and did not contribute to the loss. They instead identified vibrations from construction work at a neighbour’s home as the proximate cause.

In its dispute ruling, the Australian Financial Complaints Authority says neither of the insurer’s experts could show the renovations were not completed to relevant standards.  

Addressing Allianz’s suggestion that the work was inadequate because the damage was limited to a specific area of the house, an AFCA ombudsman said: “I note it is possible that area of the home may have been more susceptible to damage due to previous works ... However, it does not change the fact the damage manifested during the [neighbouring] construction works.  

“There is no evidence the previous works were done improperly. I also note the works have withstood a range of normal environmental conditions and ordinary use until this time.

“Therefore, the fact this area of the home may have been more susceptible to damage is not, of itself, a basis to conclude the damage is not accidental or is wear and tear.

“Instead, I consider the likely cause of damage is the construction works next door.”  

Allianz must accept the claim and provide a cash settlement based on the quoted amount of $68,455, plus surveyor and legal costs.

See the ruling here.