Strata complainant denied cover for mould damage

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A complainant whose strata unit and contents were damaged by mould has lost her dispute after a ruling found that she failed to show that the mould stemmed from an insured event.

The insured lodged three claims between May 2021 and March last year related to damage to her contents relating to storm and flooding events. IAG agreed to cover damage related to these claims but disputed that they were responsible for subsequent mould growth that caused further damage.

The policyholder disagreed with the insurer’s assessment and sought for it to settle the claim for the entire insured sum of her contents.

The first claim lodged by the complainant on May 12 2021, related to damage to several rooms after water entered the property through a sliding door. IAG agreed to cover carpets that had been damaged and arranged a list of non-salvageable contents, which it cash-settled with the claimant.

The policyholder lodged another claim in February last year for hail damage to the property’s pergola; she said the hailstorm occurred in the previous month. The insurer agreed to cover the pergola for $3696.

The complainant lodged a third claim on March 17 related to flooding in the property’s garage caused by heavy rainfall.

IAG covered damage to all items in the garage and the motorcycle stored there, which was covered by a separate policy.

The complainant said that she noticed mould damage to her blinds on April 12 and informed the insurer of her concerns on May 12, approximately three months after the February hail event. She said that mould stemmed from the claimed events.

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IAG engaged a restorer, referred to as RE, to inspect the property and assess the mould damage.

RE’s report said there was “no sign of water entry into the property” during the inspection. They noted that the claimant stated that she could not open all the external windows at the unit because of the ongoing storm and that she speculated that this was the reason for the mould growth.

RE concluded that the mould growth was due to environmental factors highlighting “excessive dust behind furniture and high humidity levels over an extended period of time”.

A secondary opinion from an insurer-appointed builder agreed with RE’s assessment, noting that the complainant did not attempt to clean a bedroom that had a “musty odour and damp environment”.

The Australian Financial Complaints Authority (AFCA) panel said that the available evidence did not point to the insured events causing the mould damage, noting that the property had an extensive history of water entry.

“The available evidence indicates the complainant’s property has a long history of water entry that has been well documented,” AFCA said.

“The information presented by the complainant indicates as far back as 2007 the property had experienced flooding due to issues with site drainage and building defects.”

AFCA acknowledged an expert report identifying “costly and major works” needed to protect the property from frequent flooding and noted that these works were never completed.

It said that the policyholder had “clearly been aware of the ongoing issue of water pooling” and had tried contacting her strata manager to rectify the issue.

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The panel said the strata body and its insurer’s actions could not be considered part of its decision on the dispute. It said it was satisfied with IAG’s decision to decline the claim.

“The panel does not consider the mould damage to the contents was caused by a listed insured event, as required for the policy to respond,” AFCA said.

“The mould was most likely the result of the existing site drainage issues identified at the property and a lack of ventilation.”

“That means the insurer is not liable for mould damage to the contents claimed, nor for any mould remediation at the property.”

The ruling also acknowledged that the complainant had taken out “accidental damage” cover for the policy but said that this cover could not be applied because the alleged damage fell under one of the listed insured events covered by the policy.

AFCA also rejected arguments from the complainant that the insurer’s handling of the claim led to delays that worsened the mould damage, saying that IAG “managed the matter reasonably and fairly”.

IAG elected to provide the complainant an ex-gratia offer of $2000 for the claims experience, which the panel considered fair under the circumstances.

Click here for the ruling.