No damage, no cover: insurer denies claim for landslide-threatened property

20 January 2022

Homeowners whose property was deemed “an unacceptable risk to human life” following a landslide will not be able to claim on their home and contents insurance policy.

The Australian Financial Complaints Authority (AFCA) ruled that the lack of damage to the home meant IAG was entitled to deny the claim.

A claim was lodged in October 2020 after the property was evacuated due to the landslide, which the complainants say was caused by a storm and resulted in boulders falling and damaging neighbouring homes.

An engineer was engaged by the government department that owns the land where the landslide occurred, and reported that risk mitigation measures would cost $3.7 million.

“The government department later wrote to the complainants on 5 May 2021 saying there were no options to eliminate all risks and that residents will remain at their property at their own risk,” AFCA said.

“It appears clear that it is not safe for the complainants to live in the property. Further, given the government department’s letter, it does not appear the property will be safe to live in for the foreseeable future.”

AFCA says there is no dispute that the property is unsafe for human habitation, but it does not agree with the complainants’ position that the home and contents should be declared a total loss.

“There must be loss or damage to the home for the policy to respond,” it said.

“Nowhere in the policy does it contemplate a situation where it will compensate the complainants for their inability to use a home that has otherwise not suffered any loss or damage to it.

“After careful consideration of all the available information, the panel considers it is fair in all the circumstances for the insurer to deny the claim.”

Click here to read the full ruling.