Dispute Over Damages Caused by Violent Painters: Homeowners Unable to Increase Insurer's Offer
Homeowners Lose Battle for Higher Compensation After Painter Attack Damages
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Homeowners claimed damages from contracted painters who damaged their property during a violent attack.
However, they have lost their challenge to increase their insurer's cash settlement offer of $53,000.
After purchasing the house, renovations were ongoing when a group of painters caused damage to several walls and windows in November 2021. The homeowners lodged a claim with IAG, and the male claimant alleged that the workers had "turned on him" during a meeting over workmanship issues and attacked him before causing damage to the property. The painters were later arrested for assault.
Assessment and Offer from IAG
An assessment from an insurer-appointed builder recommended that the matter be handled with a cash settlement, as repairs might not match the existing texture. The scope of works (SOW) for the repairs quoted by the builder was $13,203 in early December. Despite this, the complainants were not satisfied with IAG's offer, and the insurer's requested the builder to revisit the initial quote. AI updated the initial quote, and IAG offered a cash settlement based on the revised quote in April last year, which the homeowners dismissed again.
They had instead obtained a report from a quantity surveyor, referred to as JB, which stated that AI's SOW was insufficient to cover the rectification works and "not a genuine quotation". JB observed that the property had sustained water and ceiling damage, which led to mold growth. The surveyor quoted a repair cost of $120,000 to $130,000.
However, IAG denied responsibility for the mold or water damage and advised that the complainants would have to file a separate claim for the damage to be assessed. In August, IAG offered to increase its cash settlement by 25%, taking its offer to $24,765, which the claimants also rejected.
Builder's Report and Insurance Settlement Offer
The insurer then engaged a building consultant, referred to as CF, to inspect the property and report on the damage. However, the complainants denied them access. But CF provided a desktop report based on an analysis of the various quotes. The consultant estimated that the repair cost amounted to $39,504, which IAG uplifted with a 20% contingency and fees to cover four weeks of temporary accommodation. This led to the insurer’s offer amounting to $53,000.
The homeowners disagreed that the offered settlement was inadequate since it did not consider rectification works for mold damage, which had worsened due to the insurer's delays. However, the Australian Financial Complaints Authority (AFCA) determined that there had been no evidence to show "a causative link" between the malicious damage and water ingress, leading to mold growth.
"Given that the malicious damage involved scratching and gouging to internal walls and a window frame, the panel on balance considers it unlikely any such link exists," AFCA stated.
The panel further revealed that the delays that led to the mold growth could be attributed to the complainants' failure to provide an itemized counter-quote until mid-June last year, more than seven months after the claim had been lodged. If the homeowners wished to have the mold damage covered, they would have to file a separate claim.
AFCA Ruling
The AFCA acknowledged that IAG's offer was "overall reasonable" and required the insurer to waive the $1000 policy excess. The ruling also stated that IAG's offer for temporary accommodation was fair, despite assessments that suggested it would not be required. The homeowners' request for ten months' worth of accommodation, estimated to cost $23,336, was turned down by AFCA.
In summary, the insurer denied a request by complainants for a higher payout over damages caused by violent painters who were also charged with assault in November 2021. This decision was supported by AFCA, which found IAG's offer reasonable and fair, and the homeowners would need to file a separate claim for mold damage.
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Indemnity: A legal principle that stipulates that insurance policies should restore the insured to the financial position they were in before the loss.
