Insurer in the clear for mould damage to storm-hit property

A landlord who says a storm caused a mould outbreak on her property has lost a claims dispute to have the damage covered

The complainant said that a storm on July 26 and 27 2020 caused a widespread mould outbreak throughout the house and made it unlivable.

Tenants living there informed the landlord of the mould, which had spread onto furniture and clothes, and vacated the property on August 5 2020.

On August 28, the homeowner claimed on her home building policy with Auto and General Services (A&G), but was denied after the insurer said the storm did not cause the mould and other damage.

A&G acknowledged a roof tile in one of the bedrooms may have been dislodged by the storm and offered a cash settlement for damage in that room.

The complainant dismissed the offer and sought complete compensation for the damage, claiming that the mould was not present before the storm.

The Australian Financial Complaints Authority (AFCA) determined that the mould could not be substantially proven to have been caused by the storm and that A&G was entitled to deny cover.

A builder appointed by the insurer reported on October 22 2020 that moisture entering the property from fretting roof tiles, which had been ongoing for years, caused the mould, not the storm.

The builder said some damage was fixed when he inspected the property but noted that visible mould remained on the ceiling, walls, windows, and skirtings.

The complainant filed a report from an expert referred to as MY on August 6 last year that disagreed with the builder’s claim. MY said that there would be more ongoing issues with mould if the fretting roof tiles were the cause, particularly on the side of the home afflicted by heavy rain.

Another expert, TC, said that any fretting on the roof tiles was ‘superficial’ and had no bearing on the integrity of the roof tiles.

TC observed “clear evidence of point of external entry through the void created by the detached hip shell end” but did not determine if this was the cause of the mould.

MY said two areas where hip tiles dislodged may have caused water ingress but did not say that the opening caused the widespread mould. The panel noted that MY could not identify the location of the two areas.

MY also said that a more powerful storm hit the property near the time of their inspection and that there was no evidence to show that the ceiling experienced a water leakage.

AFCA determined that neither TC nor MY’s findings provided a plausible explanation for the widespread damage to the property.

AFCA also said the original storm could not have caused the mould, given that MY observed a stronger storm that did not cause significant damage to the property.

MY’s report highlighted other factors, it said, including a lack of ventilation in the kitchen and bathroom, as potential causes for the mould.

AFCA acknowledged that the settlement claim for the dislodged roof tile was not an admission that it was the cause of the mould. It ruled that A&G would pay a 20% increase on its original settlement price of $4524.96 to cover the risk associated with repair work and variances in pricing for materials, and the final sum paid to the complainant was $5429.95.

The complainant also sought compensation for money lost because they could not rent out the property, arguing that the damaged bedroom was the reason why.

AFCA dismissed the claim, saying that the landlord could still rent out the property if the damage only occurred in the bedroom. It noted that the property was unlivable due to widespread damage to the house, most of which was not covered by the claim.

Click here for the full ruling.