Homebuyers lose dispute after inspection misses hail damage

New homeowners have lost a claim dispute after a pre-purchase inspection failed to mention pitting over their entire roof, caused by hail stones the size of tennis balls striking the area six months earlier.

Before finalising the purchase, the buyers arranged the inspection by a qualified builder who identified only “heavy surface rust due to metal reaction, zinc roof sheeting and iron valley gutters” on the roof.

They went ahead with the purchase of the house and took out a home and contents policy with Commonwealth Insurance which incepted on November 4 2020.

They then engaged a tradesperson to fix issues identified in the builder’s inspection. The tradesperson noticed the hail indentation marks and on December 13 2020, they lodged a claim for damage to the roofs of their patio, main house, carport and granny flat, as well as a bedroom ceiling and kitchen walls.

A Commonwealth Insurance expert stated the cause of the damage was a significant hailstorm in April 2020 with hail stones the size of tennis balls, and its roofing specialist found visible pitting over the entire house roof which was indicative of hail impact, and that the rear granny flat, pergola and carport had also suffered minor dents on the roof sheeting.

The claim was declined and the homeowners went to the Australian Financial Complaints Authority (AFCA), saying the damage must have happened after the policy started as it was not identified in the pre-purchase inspection report. There were storms after the property sale completed, they said, and that could have caused the dents.

Commonwealth Insurance said the only significant storms before the claim were in April and October, both before the policy started, but the policyholders said the insurer had not shown that these two events caused the damage.

AFCA ruled the homebuyers had not established a valid claim as there was no Bureau of Meteorology information that a hail event of sufficient magnitude occurred during the period of insurance.

“It is more probable than not that it occurred before the policy commenced,” AFCA said. “Identifying pre-existing hail damage after the house purchase is not a matter for the insurer.

“I do not consider that it was reasonable for the complainants to expect the insurer to pay the claim without them providing any information to show that there was a hailstorm after the date the policy started.”

A comparison of photos from the pre-inspection report and images taken after the policy incepted indicated that the roof condition was very similar, and the damage pre-existing, and AFCA said the policyholders had been unable to establish there was a hailstorm after the date of purchase of the policy which was of sufficient force to cause the roof damage.

“It is not enough for the complainants to say that there was no hail damage noted on the report they commissioned on November 4. The absence of the hail damage in the earlier report does not overcome the absence of information about a hailstorm after the start of the policy.”

AFCA said an initial letter from the insurer was unclear and the homeowners “would have suffered interference to their peace of mind”, noting Commonwealth Insurance declined the claim even though its roofing specialist recommended accepting it.

However, AFCA also said there was no basis for compensation to be paid.

“The insurer’s decline letter was confusing to understand,” AFCA said. “The insurer could have drafted a decline letter that was easier to read and more relevant to the circumstances. However, this does not mean that the insurer should pay compensation.”

See the full ruling here.