Homeowner Faces Setback in Sinkhole Saga

13

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The deep pit, which measured 4.5 meters, appeared beneath pavers just 1.5 meters away from the house in August 2022.

The homeowner contacted QBE insurance to lodge a claim, prompting the insurer to send a team to cordon off the affected area for safety.

The homeowner argued that the pit had been formed by a leaking pipe and believed the visible water flow at the bottom was evidence of such. He suggested that the water leak had caused soil erosion, exacerbating the formation of the pit.

In response, QBE appointed a forensic structural engineer to investigate. The engineer, assisted by a plumber, conducted several tests and authored three reports on their findings.

The investigation concluded that the pit resulted from the collapse of a well capping that had been in place for over five decades, predating the home's construction according to the neighborhood residents' accounts.

According to the engineer, the old well capping had eroded over time, explaining the presence of water at the base. Nearby sewer and stormwater pipes were examined, and it was found that water flow into the pit had been consistent. A sewer pipe leakage, identified approximately 19 meters from the pit, was determined to be too far away to contribute to its formation.

No legal or physical connection was determined to link the sewer leakage or any nearby pipes to the well's deterioration. The plumber validated the engineer's conclusions, confirming a lack of nearby pipe networks capable of forming a sinkhole.

The Australian Financial Complaints Authority (AFCA) later ruled in favor of QBE, citing comprehensive evidence provided by the engineer. The findings firmly established that the pit was a disused well, lacking any evident links to a leaking sewer or other leaks.

AFCA endorsed, "The expert evidence substantiates that the pit originates from a long-decommissioned well existing before the complainant’s house was built. Despite extensive testing, the results indicate no connection between any pipe leaks and the pit’s formation, the water at its base, or the erosion observed."

Though QBE did agree to compensate for incidental damages done during the examination process, including $1122 for the damage to the homeowner’s timber deck and an additional $1500 for the delays in processing the claim, which took over six months.

This case, initially reported by insurancenews.com.au, underscores the critical role of thorough expert investigation to differentiate between naturally occurring subsidence and structural failures caused by other factors.

Published:Wednesday, 10th Jul 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

Allianz Australia Penalised for Misleading Travel Insurance Information

15 Jan 2026: Paige Estritori

In a significant ruling, the Supreme Court of New South Wales has imposed fines totaling $16.8 million on Allianz Australia Insurance and its subsidiary, AWP Australia, for disseminating misleading information about their travel insurance products between 2016 and 2018. This decision underscores the critical importance of transparency and accuracy in the insurance sector. - read more

Surge in Medical Claims Among Australian Travellers Highlights Importance of Comprehensive Insurance

15 Jan 2026: Paige Estritori

In 2024, medical incidents emerged as the leading cause of travel insurance claims among Australian travellers, accounting for more than 40% of all claims handled by nib Travel. This trend underscores the critical importance of securing comprehensive travel insurance to mitigate the financial risks associated with medical emergencies abroad. - read more

Seafood Business Wins Insurance Dispute Over Storm-Induced Power Outage

15 Jan 2026: Paige Estritori

A recent ruling by the Australian Financial Complaints Authority (AFCA) has significant implications for businesses seeking insurance compensation for losses due to power outages caused by natural disasters. In this case, a seafood distribution company experienced substantial stock losses when a storm-induced power outage left its refrigeration systems inoperable for a week. The insurer initially denied the claim, citing a flood exclusion clause. - read more

Insurance Council Advocates for Liability Law Overhaul to Curb Rising Premiums

15 Jan 2026: Paige Estritori

The Insurance Council of Australia (ICA) has called for urgent reforms to civil liability laws to address the escalating costs of liability insurance premiums affecting businesses nationwide. In a recently released white paper, the ICA highlights the need to review state-based civil liability laws that have remained unchanged for nearly 25 years. The report identifies key areas requiring attention, including psychological injuries, worker-to-worker claims, and leisure and recreational risks. - read more

Australian Insurers See Profit Surge in Q3 2025

14 Jan 2026: Paige Estritori

In the third quarter of 2025, Australian general insurers reported a significant after-tax profit of nearly AUD 2.3 billion, marking an increase from approximately AUD 2.1 billion in the same period of 2024. This uptick reflects a combination of rising premium revenues and a reduction in claims, contributing to the industry's robust financial performance. - read more

Click for more Insurance News