IFSO Case Study

Mr and Mrs A had cover for their house with the insurer. In January 2018, a significant storm event caused damage to the house. A couple of weeks later, a toilet at the house overflowed, associated with the cleaning of the septic tank after the storm. 

Mr and Mrs A made a claim with the insurer for the damage. The insurer accepted the claim.

Between February 2018 and February 2019, there were ongoing communications and discussions between Mr and Mrs A and the insurer about the required scope of works to repair the damage. 

Mr and Mrs A made a complaint on the basis that the insurer’s scope of works did not cover all the storm related damage. They also complained about the delay in settlement. The case manager’s assessment The policy specified that the insurer would pay Mr and Mrs A the estimated reasonable cost to repair the damage. 

The case manager spoke to Mr and Mrs A and supported them to obtain a builder’s report and quote to repair the storm related damage. The builder’s quote was significantly higher than the cost estimate the insurer had relied on to cash settle the claim. 

The insurer reviewed Mr and Mrs A’s builder’s report and quote. On the basis of the quote, the insurer agreed to increase the claim cash settlement payment by a further $62,994.97. 

However, there remained outstanding items in dispute. Based on the available information, the case manager determined that the insurer was required to cash settle the claim based on Mr and Mrs A’s builder’s quote, less deductions for the fences, beach hut and septic tank. 

The insurer was required to include temporary accommodation and cleaning in the cash settlement. This amounted to $30,134.90 in addition to the $62,994.97 already offered by the insurer. 

The insurer was not required to contribute more than 50% of the fence cost, or survey report cost, because Mr and Mrs A had not established the brick fence was located independently within their boundary, and was not subject to the Fencing Act 1978. 

The case manager outlined the process Mr and Mrs A and the insurer should follow to finalise the claim. This included the appointment of an independent builder to conduct a site inspection of the house when repairs had commenced, to determine if there was any hidden storm damage. 

The builder would also provide an opinion on the required repairs to the beach hut and fences.

The case manager's assessment: 

The policy specified that the insurer would pay Mr and Mrs A the estimated reasonable cost to repair the damage.

March 2021

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