Storm vs deterioration: heritage property claimant loses proximate cause dispute

The owner of a heritage-listed home that was damaged following a storm will not be compensated for his losses after a dispute ruling sided with his insurer’s decision to decline the claim.

The complainant lodged a claim under his events-based home and contents policy on January 29, 2021, after part of the property’s parapet wall collapsed and its chimney was damaged.

The claimant, who had resided at the century-old home in inner Melbourne since 1976, said that the incident was the “direct result” of a storm and heavy rainfall that hit the area. Records from the two nearest weather stations showed that about 44mm of rain fell within 24 hours of the date the damage was reported.

Following its assessment of the damage, Suncorp declined the claim, saying that the damage was primarily caused by a gradual deterioration of the property’s condition.

The insurer appointed engineers, referred to as IL, to inspect the home after make-safe works had been completed.

IL’s report noted Google Street View images of the property from November 2007 and December 2018, which showed that the mortar of the parapet wall had been “degraded”. It said that the brickwork had worsened due to the property’s age and proximity to the nearby salt-rich air from Port Phillip Bay.

The engineers also identified that the chimney had been “distressed” due to long-term degradation and that the collapse of the parapet wall had compromised its roof framing.

IL said that the chimney was not at risk of giving way immediately but advised to rectify the issue within the next three months to prevent an “eventual collapse” that could cause severe damage to the building and potential loss of life.

The engineers concluded that the heavy rainfall had “exacerbated the weakening of the bond between the mortar and brickwork,” but said that the primary cause of the damage had been outdated building practices and gradual deterioration of the property.

The complainant’s neighbour, referred to as P, said that the wall had a “pre-existing lean” prior to the event and they were concerned about its state. The top portion of the wall had fallen into P’s property when it was damaged.

The complainant said the storm and subsequent rain were the “catalyst for the collapse” because it had weakened the mortar enough to cause the additional weight to cave in.

The Australian Financial Complaints Authority (AFCA) acknowledged the homeowner’s “reasonable analysis” of the events but said the “catalyst” for the event was not necessarily the proximate cause of the damage.

AFCA said IL’s report had been “comprehensive and logical” and supported the conclusion that the leading factor for the incident had been the property’s long-term wear and tear.

It also attributed evidence from the neighbour and Suncorp’s assessor, whose report had been “broadly consistent” with the engineers’ findings.

“The events the complainant has described are unfortunate and I understand he has suffered hardship due to reasons beyond his control,” AFCA said, “But the outcome regarding the substantive claim is fair.”

The ruling acknowledged that the insurer “had not carefully considered the severity of the storm” when the claim was initially filed, which caused delays in the process and increased stress to the complainant.

“I accept the delay and service issues would have been a source of inconvenience and anxiety for the complainant,” AFCA said.

“Whilst the insurer’s investigation evolved and led to its decision to decline the claim, I do consider it could have been prioritised, especially considering the complainant made the insurer aware it was causing him distress.”

It required Suncorp to award the complainant $1000 for non-financial losses caused by the delays.

Click here for the ruling.