An owners’ corporation has lost a dispute over the collapse of a parapet wall, after an insurer-appointed engineering consultant described the design as “grossly inadequate”.

Chubb declined the residential strata claim because the damage was primarily caused by defective design, materials or workmanship – excluded under its policy – rather than a July 2025 storm.

The owners said the wall, above the roof on the building’s western edge, was built in the 1990s. They argued the insurer had relied on theoretical numbers and assumptions, and that an exception applied for cases where the policyholder could not reasonably be aware of a defect.

The engineering assessment said the wall was unreinforced, hollow and effectively freestanding, and cracking and prior movement indicated a gradual deterioration caused by inadequate design or construction.

The consultant, which reviewed Bureau of Meteorology data and Australian Standards, said the wall should have been able to withstand a much higher wind load than experienced during the storm.

The Australian Financial Complaints Authority finds the wall did not meet design requirements in its unreinforced and unstabilised state, and the storm was not the dominant cause of its failure.

“The final collapse occurred during the claimed weather event, but the damage flowed from the pre-existing inability of the wall to resist lateral loading and overturning,” the ombudsman says.

AFCA has also rejected the owners’ bid for cover under the exception for cases when claimants could not have been aware of defects.

The ombudsman says the wording does not apply to the defective item itself – in this case the wall – but to resulting damage to other parts of the insured building or to third-party property.

“The insurer has shown, on balance, the proximate cause for the damage to the wall is defective design and construction, which is excluded under the policy.

“If, however, the complainant has evidence of any resultant damage from the wall collapsing or receiving third-party demands for such damage, this is to be provided to the insurer for consideration.”

See the decision here.