A complainant whose home was rendered unliveable for more than a year due to delayed repairs to water damage has won her claims dispute to receive compensation for rental losses. 

The homeowner had found her property significantly damaged by a water leak after returning from a holiday. She lodged a claim with Insurance Manufacturers of Australia on February 8 last year, which agreed to repair the home. 

However, disputes arose between the two parties after the claimant said the repairs had been unreasonably delayed. She says the insurer told her the repairs would be completed in an approximate timeframe of four to six weeks. But the repairs were only completed in April of this year. 

The insurer says it told the complainant in March last year that its builders had been “spread very thin” due to covid and weather event claims and that the repairs exceeded its initial assessment. 

The complainant says the delays prevented her from renting out the home as she prepared to move into a new property ahead of her upcoming marriage and sought compensation for the losses. 

Insurance Manufacturers of Australia says it was not required to cover the projected loss of rent as the home had been owner-occupied at the time of the leak.  

The policy only provides cover for rental loss if the property is leased out, and the claimant had yet to disclose or provide documents showing that she would be renting out the home.  

The Australian Financial Complaints Authority (AFCA) acknowledged the highlighted policy terms, which required the home to have already been leased out. 

However, AFCA highlights claim notes from February last year, which identify that the insurer had been aware that the complainant had sent out a rental appraisal and was “intending to put the property on the market for rent when she moved out”. 

The ruling determined that Insurance Manufacturers of Australia’s delayed repairs had “unfairly deprived the complainant of fair opportunity to earn rental income from her home”. 

“I consider the home’s repair should have begun by April 8 2022,” AFCA said. 

“This means the home’s repair should have been completed by May 20 2022 based on a six-week repair timeframe.

“There is no dispute the home’s repair was not completed by then.”

It says Insurance Manufacturers of Australia “failed to act with utmost good faith towards the complainant” by denying her compensation for the rental loss, despite being aware of her intentions to lease the property. 

AFCA required the insurer to pay the homeowner $21,857.14 in calculated rental losses based on the projected date of the home being rented out and the completion of the repairs. The insurer was also told to pay $3000 for non-financial losses and inconvenience from the delays.  

“The insurer’s failure to act with utmost good faith caused the complainant rental losses,” AFCA said. “It also caused her unusual delay, inconvenience and interference.

“Given this, it is fair the insurer compensates the complainant for rental losses and for her poor claims experience.”

The insured also cited issues with the insurer’s offering of temporary accommodation, which she says was only available for about a month, despite the policy entitling her for the duration of the repairs. She says she was required to make her own accommodation arrangements after March 4.  

However, the ruling notes that the woman had moved into her newly purchased property and did not require the insurer to pay compensation as the complainant had not incurred any additional temporary accommodation costs.  

Click here for the ruling.