Claimant loses dispute over delayed ceiling collapse

A Victorian homeowner who alleged that last year’s earthquake caused his kitchen ceiling to collapse six weeks later has lost his dispute after an Australian Financial Complaints Authority (AFCA) ruling determined his insurer’s decision to deny the claim was valid.

The complainant reported that the ceiling partially collapsed around November 8 last year. He argued the 5.9 magnitude quake that hit the state on September 22 contributed to his ceiling detaching and the eventual accident.

IAG appointed a builder, who observed pre-existing damage to the property during an inspection, including water leakage from a previous storm near the affected kitchen area. The builder provided no cause for the ceiling detachment and recommended the insurer carry out a further assessment of the property, saying, “there is a great worry of further collapse”.

A structural engineer, referred to as VV, conducted “make safe” work to prevent further damage. It did not attribute a direct source for the collapse but noted damaged roof trusses and conducted repairs to prevent further concerns.

A second structural engineer, referred to as IX, attended the property in February and concluded that the earthquake did not cause the observed damage.

IX noted that the property’s “abnormal soil moisture conditions” caused by poor water management and nearby trees enabled “differential foot movement,” which contributed to the home’s weakened structural integrity.

The engineer said the conditions led to the fracturing of timber roof trusses and dislodged nail-plates. The report concluded that the observed damage was “inconsistent with seismic forces”.

AFCA said the expert’s report was “logical and clear” and noted the property’s location was 127km away from the earthquake’s epicentre.

It accepted the findings from the report, saying it was “the only detailed analysis of the cause of the damage”.

IAG referred to the home and contents policy that held exclusions for accidental damage caused by “settling, shrinkage or any movement of earth”.

“Whilst I accept the damage is accidental, the dominant or effective cause is ground movement affecting the structural integrity of the home,” AFCA said.

“As the policy excludes loss or damage caused by ‘settling, shrinkage or any movement of earth’, I accept the insurer is entitled to exclude the claim.”

The ruling required the insurer to compensate the homeowner $1000 for delays that caused unnecessary safety concerns. It noted that the insurer made no action to appoint a structural engineer until six weeks after the builder’s recommendation.

It said the insurer should have been empathetic to safety concerns raised by the complainant, saying he and his family were put in a vulnerable position.

“The complainant felt vulnerable in a home he did not believe was safe,” AFCA said.

“The insurer should have acted more promptly and could have done more to keep the complainant informed about its process and the security of the ‘make safe’ work.”

Click here for the ruling.