The industry ombudsman has ordered an insurer to pay almost $432,000 to policyholders whose farmhouse was flooded in 2022, finding delays in handling the claim contributed to the property’s deterioration and mould growth.

Farm insurance specialist Achmea must pay $383,947 for building repairs, $36,714 for additional temporary accommodation costs, $6300 compensation for non-financial loss and up to $5000 of professional costs.

Achmea accepted the claim after the February 2022 flood and offered a $265,000 cash settlement, but the policyholders argued that was inadequate.

Both sides obtained expert reports, and in a dispute ruling the Australian Financial Complaints Authority says it “prefers” the policyholders’ quantity surveyor assessment of $349,043, plus a 10% allowance for contingencies and the loss of a lifetime guarantee that would have applied to insurer-approved repairs.

That assessment identified significant omissions in the insurer’s original scope of works, including mould remediation, removal of asbestos and impacted wall and ceiling linings, and additional engineering costs and council approvals.

AFCA notes the policyholders’ expert inspected the property three times, but the insurer’s quantity surveyor conducted a desktop review.

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The insurer argued some of the claimed work related to maintenance issues rather than flood damage, and said the policyholders asked for stripout work to be paused while they considered settlement options and whether to relocate the house to reduce future flood risk.

AFCA says the insurer did not inspect the property until about two months after the flood, and little remediation work had occurred by September 2022.

“I am satisfied the insurer’s delay significantly contributed to the deterioration and mould at the property”, an AFCA member said.

The authority says the insurer’s conduct caused the policyholders to incur temporary accommodation costs beyond the policy’s normal limits. Its first cash settlement offer was not made until March 2023.

AFCA has awarded the maximum $6300 compensation for “stress and inconvenience caused by ... poor claims handling”.

See the ruling here.