Time is money in hailstorm dispute
The owner of a hotel in the NSW Blue Mountains has partially won a dispute with Allianz over costs incurred after a hailstorm.
The 80-room hotel was undergoing renovations when the hail hit in February 2022. A tenant was due to take over the property the following month, but the storm delayed the handover and the owner claimed for costs incurred during this period.
In ruling “substantially in favour” of the owner, the Australian Financial Complaints Authority says the owner could not give the tenant access to the hotel as expected yet was required to maintain the property in good condition during that time.
The renovations were delayed by about seven months, the hotel could not be used fully until June 2022, and the last tradesperson left in January 2023.
The dispute centred on “increased cost of working” between March 2022 and February 2023.
The property owner said it incurred costs of $418,000 because it could not hand over the hotel to the new tenant in March 2022.
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Allianz accepted a claim for storm damage and a portion of a business interruption claim for loss of rent.
The insurer declined to cover most items included in a claim for increase in cost of working. It said most of the outgoings claimed represented lost revenue or were ordinary operating expenses not covered under the policy.
Allianz said the renovations rather than the storm caused the increased cost of working.
The hotel owner argued the loss included expenses it would not normally have incurred if the tenant had taken over the hotel on time.
AFCA heard the tenant was on-site when the storm occurred but was unable to operate. The owner reimbursed some of the tenant’s expenses to mitigate its future loss.
The ombudsman notes expenses the tenant incurred to operate the hotel, and says Allianz is not required to cover these.
But the insurer must cover some expenses, including electricity, gardening, and fire and pool maintenance.
Read the ruling here.
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