Insurer must pay for tenant's mould-damaged contents

A tenant who said that she and her family were left homeless due to her insurer’s failure to properly assess mould damage claims has been compensated following an Australian Financial Complaints Authority (AFCA) determination…

The complainant lodged several claims in May and June last year for mould damage to her contents that she said amounted to a “total loss”.

Between June 2021 and May last year, she had lodged six damage claims related to leaky household appliances and storms, which IAG did not dispute. The claimant said that the leaks had been the cause of the mould growth and damage.

The insurer agreed to settle for damage relating to the water leaks but said that the complainant had not established a total loss.

It said the mould damage had been caused by the building owner’s “ongoing negligence” in not repairing the leaks.

An IAG-appointed restorer acknowledged considerable water damage throughout several rooms and identified contents but said that “no visible mould” was present on these items. AFCA acknowledged that this report was limited because the claimant was absent during the May 17 inspection.

A secondary restoration consultant noted mould growth on some items in the shed of the property but said that other sampled contents had not been affected.

A complainant-appointed building biologist reported that air and surface sampling identified “extremely high levels of mould” and recommended that contaminated items not be moved. The biologist also identified stachybotry spores in the shed, which they described as “extremely dangerous”.

An expert, referred to as HR, inspected the property on July 4, where they noted a “musty odour” and said there was an “urgent need for remediation”.

HR conducted a secondary inspection a week later and reported that fungal spore concentration samples from inside the home were found to have been five to ten times higher than outside samples.

They said they found an “extremely high concentration” of mould spores on the contents throughout the home and recommended that all porous and semi-porous items be considered “non-restorable waste”.

AFCA agreed with HR’s findings, saying there had been a “significant level of mould contamination” based on the information shown.

IAG said the mould damage was caused by the complainant and her landlord’s failure to mitigate the leaks and further damage.

AFCA disputed this, saying that it was not the complainant’s responsibility to be aware of the impact of water ingress because she did not own the property. It also noted that the landlord remediated the leaks after hearing the claimant’s complaints.

It said that the damage to the contents was likely “a combination of the impact of storm and water and oil leaks causing the development of mould,” which was covered by the insured’s policy.

The ruling said, given the propensity of claims lodged in May last year, for it to be fair to assess the losses purely on the damage to the contents and based upon the insured sum for that period, which was $76,690.

It acknowledged the “persuasive reports” supplied by the policyholder and said that based on other factors, including the adverse health circumstances of the mould exposure, it would be fair for IAG to cover the insured sum, despite noting that the damage likely exceeded this amount.

“The available information indicates that most likely the extent of damage to the contents would exceed the sum insured and it is fair in these circumstances that the claim be settled as a total loss,” AFCA said.

The insurer was required to award the complainant $49,001 on top of the initial $27,688 it gave for the initial settlement of water damage.

The ruling also disputed IAG’s assessment that the events did not cause the home to be “unliveable”.

“While I accept there are many people who may have been able to continue to reside in the complainant’s home, I accept based on the reports provided, that both the complainant and her son were significantly impacted by mould,” AFCA said.

AFCA said that the claimant was unable to live in the property from May 3 until the expiry of her tenancy on August 13 last year and required the insurer to pay for extra rent costs of up to $5534 as well as an additional $1000 for expenses associated with the removal and disposal of the non-restorable items.

The ruling said that the “complexity” and IAG’s handling of the claim “added considerably to the complainant’s stress, mental strain and frustration,” and awarded the claimant $5400 in compensation, the capped amount.

The insurer apologised for its actions and offered the claimant a $10,000 payment, which included AFCA’s required amount.

Click here for the ruling.