Insurers looking to avoid paying for flood damage.

Discussion in 'Legal Issues' started by hudbry, 6th Sep, 2022.

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  1. hudbry

    hudbry Well-Known Member

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    Hi everyone,
    Really need some advice and guidance please.

    Got an investment property up in Casino that was hit by the recent floods. It's a few units on one title. Older weatherboard property. All hardwood, with the tenants coming from the low socioeconomic end of things.
    It's been insured with the same insurer for years under a strata policy.
    In a nutshell:

    The floods hit making the units uninhabitable. Getting the rent paid for by the insurance company.

    Insurers builder eventually came out to assess the damage and wrote up a scope of work up with the cost of repairs ($300k). He was not able to warranty the work though due to the age of the buildings and therefore wouldn't actually do the repairs. The insurers indicted that they would simply pay us the amount.
    The builder then got a structural engineer that did a report, highlighting some structural damage from the flood, but all in all it was ok and that he'd seen far worse houses.
    The Insurance company assessor met me and builder on site to go over things recently. He wasn't happy with the engineers report; not enough detail apparently and wants a forensic engineer to do another one.
    It's taken the insurance company months and months to get it this far.

    Got a call today from the "investigative team" at the insurance company. In short they are looking at trying to get out from paying for the floods damages!!
    They are indicating that the condition of the property before the floods was poor, claiming there is wood rot, termite damage and in a condition where they would never have insured it. They are sending this forensic engineer out to look and comment on all of this.

    At the time of purchase I had a building and pest inspection done. There was indication of some rot, which I got a carpenter in to deal with. The report did not identify any termite damage or activity.
    It's an old, hard wood building with some wear and tear which I've had maintained over the years.

    At the time of finding the insurance I had had the building and pest report done and was satisfied that the building was structurally good, but in need of some ongoing maintenance.
    At the time of insuring the property I was asked about the rough age of the building (no-one knew the exact age), the materials in the building etc etc but never any specific questions about rot or termite.
    When asked what condition it was in I explained that it was old but in sound condition as that is what the building and pest report suggested.
    I'm worried it's going to be a case of an expert witness (engineer) going up against a layman's (me) impression on what the condition of the building was like at the time of insuring it

    I'm absolutely terrified. I don't know what to do, or who to approach regarding legal advice or what my rights are. The "investigative team" said that once the engineer has been out to look at it, they will do a recorded statement with me.

    I feel like I need to start preparing for a battle.
    Any advice, suggesting you might have would be most welcome.

    Many thanks.
     
    willair likes this.
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    If you're not happy with the outcome you can involve the insurance ombudsman.
     
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  3. willair

    willair Well-Known Member Premium Member

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    Not Advice in any way -but I recently went through the same with a flooded property early this year and also in 2011 -The 2011 is in the final stages of the class action.
    With the recent flood this year as what you have posted is much the same as I experienced..
    First of all have a read of the legislation within the ombudsman site as there are timeframes that insurance companies have too comply with -and also the steps you need to complete before contacting them..
    Always look at the positive side-52 weeks rent is one item.
    Hopefully in your policy there is cover for clean-up cost's which can go above 30-40k ..
    Then as I know there is a timeframe for when after the insurers decision is not to rebuild then and pay you out for the amount stated on the policy..
    I was lucky this time as when the Builder and insurance assessment team turned up they decided to just pay me out..
    Even then there was over several months till payment as you will need all the rental statement's- registered lease- rental agreement-and also a copy of the mortgage and IF it's unencumbered with a 1 dollar mortgage then we had to release the title to prove we controlled that property..
    Hopefully your at the payment stage as Scott with some mate's has said once the ombudsman becomes involved is the last resort..good luck ..
     
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  4. Stoffo

    Stoffo Well-Known Member

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    It is dragging huh
    Property Insurance query - contract issue
    We still don't really know the engineers main complaint (unless it's the termite damage, which isn't covered).

    A building being "old" is no real reason to void the insurance.

    At worst it could be like carpet, an insurer may apportion the payout based on the age V's lifespan.....
     
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  5. Stoffo

    Stoffo Well-Known Member

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    Questions from other thread
     
  6. hudbry

    hudbry Well-Known Member

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    Thank you for the comments so far. Appreciate it.

    Will air - sorry to hear you are going through the same thing and have been in the past.
    Yes, I've got 52 weeks rent covered but will they ask for that back if they suggest I'm now not covered with them.
    At what stage do I start looking for legal representation?

    They initially agreed that it would be a payout, but then the assessor showed up and took it to this level.

    It's crazy. I told the lady it seems incredibly unfair that they agree to insure the place, with only the very generic questions being asked at the start about the materials of the roof, walls etc etc. Now they want to get in the professionals. I said I did my duty of care getting a building inspection and pest inspection done, they should have done the same.
     
  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    This is not the case. AFCA are the sole agency for insurance (except health insurance) complaints.
     
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  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I would engage with a solicitor who specialises in representing insurance policy holders. Allow them to guide you on what to do and say. The legal costs may become a element of your claimand they will likely put the insurer on notice.

    eg Insurance Claim Dispute Lawyers | Maurice Blackburn
     
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  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yes...lawyer up. Insurers will approach a challenge differently when they have a fight with a solicitor. Pays to be cautious.

    I suspect they may allege some of the damage was wear and tear affected. It may even be their grounds to dispute the claim all together. Assessors are paid to KNOCK BACK claims. Their job is to limit claims not make them bigger. Common one is would they have accepted the policy if they were told all things ? eg existing defects ? Good you have a purchase inspection report and it may assist OR make things worse.

    I had a contracts (project risk) claim like that. As soon as we faced a contract damages claim we ran to the insurer who appointed a excellent team of construction projects solictors who managed to see $1m+ of loss defended. They argued the primary contractor told us to leave the fibre optic cable onsite (since it could not be cut) and some vandal cut it while fenced off rendering is unuseable. And needing to be removed, replaced and relaid. The primary contractor should have considered this and instructed and paid for onsite security (which was refused due to cost !! ) and arbitration found in our favour. Insurer spent tens of thousands on legal support to avoid paying $1m+
     
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  10. hudbry

    hudbry Well-Known Member

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    That is the comment the lady from the "investigating team" said to me.
    We are waiting on the forensic engineer to make contact to view the property with my managing agent. The insurers will then be in contact with me.
    If they intend to contest the claim based on the report, and want me to do that recorded interview with them, I guess my response is going to be, that meeting won't take place until I've discussed this with my legal team.
    Any advice and recommendations for a legal outfit.
    Anyone used or come across Turnbull Hill Lawyers?

    Insurance Lawyers | Insurance Law | Claims | Turnbull Hill Lawyers

    Thanks again. Any further thoughts and advice welcome.
     
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  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Insurers can disclaim cover avoiding policy terms in such cases. Hence no legal claim for policy definitions or what engineers say. It may need legal support. Did you need to tell them?
     
  12. hudbry

    hudbry Well-Known Member

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    Hey there Paul,
    Thank you for that.
    Not quite sure what you mean by "Hence no legal claim for policy definitions or what engineers say. It may need legal support. Did you need to tell them?" can you clarify for me please? Sorry.
    At no stage did the insurance company ask any more questions other than what the roof material was, materials of the cladding etc etc.
     
  13. Heinz57

    Heinz57 Well-Known Member

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    Go through all stages of the insurance company complaints process. The magic word is “escalate”. Ask for a second assessor.

    Obtain your own reports, which must be in the detailed format required by the insurance company.
    If necessary go all the way to AFCA.

    pro tip: sending a polite e mail to the CEO prior to AFCA can lead to speedy resolution.

    As they have previous offered to cash settle they need a very good reason to withdraw that offer.
     
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  14. hudbry

    hudbry Well-Known Member

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    Thank you Heinze57. Great info there. Much appreciated.
    There is a chance that the "forensic engineer" might come back with the all clear this Friday and they will just continue with the claims process, but I'm not hopeful since he's working with the assessor!!
    We are speaking to some lawyers today to set the ground work. Making sure we say the right thing when on the phone with the insurance company.

    If the engineer comes back to me saying they are contesting the claim then I'll take your advice on "escalating" through the complaints process. The fact that they have indeed discussed with me the process of a cash settlement and it's taken them 6 months to raise this begs a few questions.

    I'll also be speaking to the engineers that did the initial report.

    I'll definitely go down the AFCA route if need be and will send an email to the CEO add you suggest.
     
  15. willair

    willair Well-Known Member Premium Member

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    That's the part that i find strange -one minute your getting a cash payout -the next your faced with more problem's..
    Not advice in any way,but also have a talk to your Accountant ,as the cash payout IF this is a rental then your Accountant will be able to help..
     
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  16. Heinz57

    Heinz57 Well-Known Member

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    Engineers usually favour the insurer unfortunately. And the assessor will never overrule the engineer. In the event of a decline, you may need to engage your own engineer (around $2500) for the dispute to proceed.

    Good luck, make a polite nuisance of yourself if necessary.
     
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  17. hudbry

    hudbry Well-Known Member

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    Just to clarify, we were still in the process of determining the amount for the payout before the change in tac. The builder assessed the damage and put a price on it. The builder explained he would not be able to warranty the work due to the age of the building and the fact that it didn't meet modern codes. The insurers confirmed this and said that they would still pay out the amount owing due to the damage of the floods.
     
  18. hudbry

    hudbry Well-Known Member

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    Yes. I made that point to the insurers when they said they were going to get another report done. I said is this report meant to be independent. They replied "of course". I explained that there would seem to be a conflict of interest here surely, them paying for a report to ultimately try and void a claim.
    They explained that the engineer won't falsify information. Blah blah........ But I was welcome to get my own report done.

    I wrote to the insurers today asking for them to put in writing what was discussed over the phone the other day, detailing the reasons why the investigation team was now getting involved 6 months into the claim. I requested this to keep for my records.
     
  19. Heinz57

    Heinz57 Well-Known Member

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    You should be able to get a transcript of all phone calls as they are usually recorded
     
  20. Stoffo

    Stoffo Well-Known Member

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    I would also be chasing clarification on this/these items in detail as this could be what the entire issue pivots on.

    Doesn't comply could be as simple as there's no frame tie's, or as major as the slab isn't suitable for the soil class.

    Have you had any issues with council over the buildings ?
    The insurer claiming the structure is not up to today's building code doesn't make it non compliant or uninsurable, building codes are updated/changed all the time and many older houses would need to be built differently if rebuilt today.

    It may be prudent to obtain your own engineering report prior to the insurer's engineer turning up, firstly you will learn and then know what they are refering to and the second engineer isn't likely to go against the first report done (unless it is obviously wrong).

    Pic's and a better description of the damage would help...
     
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