Liability Insurance Australia :: News

Share this news item!

AFCA Sides with Homeowners in Landmark Insurance Dispute Over Property Cracks

⚠️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.

Homeowners recently secured a favourable ruling against their insurer after a water leak led to significant structural damage.

After large cracks emerged on their property, Youi initially denied the insurance claim, attributing the damage to pre-existing issues like earth movement and tree root intrusion, both of which are exclusions in their policy.

Challenging Youi's stance, the homeowners took their dispute to the Australian Financial Complaints Authority (AFCA), which ultimately supported their case. The complainants argued that the damage, discovered shortly after the pipe leak in early 2023, was directly linked to the water escape.

An assessment by Youi's engineer had attributed the damage to ineffective drainage and was compounded by factors like inadequate footings and proximity to large trees. However, the homeowners countered this with their own engineer's assessment, indicating that the most severe damage occurred precisely where the leaked water had pooled, suggesting a strong correlation with the pipe burst rather than tree-induced movement.

AFCA emphasized the insurer's burden to establish that exclusions apply, noting Youi's lack of compelling evidence in their conclusions. The ombudsman's analysis favoured the complainants' expert findings, discounting the earth movement exclusion as unfounded given that the primary cause was the water leak.

The resolution mandates that Youi settle the claim, including coverage for temporary accommodations if necessary. Additionally, the insurer is required to compensate the homeowners with $1060 for professional fees alongside $4000 for non-financial losses, largely due to the distress caused by Youi's initial refusal to renew their policies. This decision was partly attributed to the insurer's premature policy termination despite the unresolved claim and ongoing case which involved credible external expert evaluations.

This development underscores the critical role of AFCA in ensuring that insurers adhere to fair practices and underscores the importance of homeowners closely documenting damage events to support their claims effectively.

The decision not only marks a significant outcome for consumer rights but also serves as a cautionary tale for insurers about the importance of comprehensive, evidence-based assessments before claim denial.

Published:Tuesday, 22nd Apr 2025
Source: Paige Estritori

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

Share this news item:

Insurance News

Businesses Advocate for Reforms Amid Rising Insurance Premiums

01 Dec 2025: Paige Estritori

The Australian Chamber of Commerce and Industry, in collaboration with the Insurance Council of Australia, has released a report highlighting the urgent need for coordinated reforms to address the escalating insurance premiums affecting small and medium-sized enterprises (SMEs). The report underscores that soaring premiums are compelling many SMEs, including beauty salons, to either forgo insurance or reduce coverage, posing significant risks to their operations. - read more

AFCA Determines Home-Based Waxing Salon Is a Business

01 Dec 2025: Paige Estritori

The Australian Financial Complaints Authority (AFCA) recently ruled that a home-based waxing salon operated by a Suncorp customer constitutes a business, not merely a hobby. This decision has significant implications for beauticians managing home-based operations, particularly concerning insurance disclosures and compliance. - read more

ASIC Announces 2025 Focus on Insurance Pricing and Claims Handling

01 Dec 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has unveiled its enforcement priorities for 2025, placing a significant emphasis on insurance pricing practices, claims handling, and complaints processes. This initiative aims to enhance consumer protection and ensure fair practices within the insurance industry. - read more

WFI Insurance's $250,000 Donation Supports Flood-Affected Queensland Farmers

30 Nov 2025: Paige Estritori

In response to the catastrophic flooding that has devastated parts of western Queensland, WFI Insurance has stepped forward with a substantial donation of $250,000 to Rural Aid. This contribution is aimed at bolstering relief efforts for farming communities grappling with the aftermath of the region's most severe floods in half a century. - read more

AFCA Supports Significant Home Insurance Premium Increase Based on Updated Flood Risk Assessment

30 Nov 2025: Paige Estritori

The Australian Financial Complaints Authority (AFCA) has recently upheld a substantial increase in home insurance premiums for a property, attributing the rise to updated assessments of flood risk. This decision underscores the critical role of accurate risk evaluation in determining insurance costs and the necessity for property owners to stay informed about potential changes in their risk profiles. - read more

Click for more Insurance News

Business Insurance Articles

How Public Liability Insurance Can Save Your Business During a Crisis

Public liability insurance is designed to protect your business from financial loss if you are found liable for causing injury or property damage to a third party. This type of insurance covers legal costs and any compensation claims that might arise from accidents or incidents involving your business operations. - read more

Understanding The Costs: How Much Does Public Liability Insurance Typically Cost?

Public liability insurance is a crucial form of protection for both businesses and individuals, safeguarding them against potential claims for personal injury or property damage that occur as a result of their operations or services. In an increasingly litigious society, having this coverage can mean the difference between staying afloat financially and facing business closure due to unexpected claims. - read more

Understanding Liability Insurance: A Must-Read for Australian Business Owners

As a business owner in Australia, navigating the complexities of insurance is crucial to safeguard your enterprise against unforeseen events. Liability insurance emerges as a cornerstone of a sound risk management plan, protecting you financially when held responsible for accidents, injuries or negligence. Its importance cannot be understated, as it serves not only to defend your business assets but also to ensure peace of mind in a climate of continually evolving liabilities. - read more

The Importance of Public Liability Insurance in the Australian Labour Hire Industry

The Australian labour hire industry has seen a significant rise in recent years, and with this growth, comes new and unique risks that companies in this industry must be prepared to navigate. One such risk is the potential for accidents or damages to occur in the workplace, which is where public liability insurance comes in. This article will explore the definition of public liability insurance and why it is so important for labour hire companies in Australia. - read more

Proven Strategies for Slashing Your Business Liability Insurance Costs

Welcome to our comprehensive guide on public liability insurance, an essential safeguard for businesses across Australia. Navigating the complexities of liability insurance can be a daunting task for many business owners, but it’s a critical component of your business protection plan. If incidents such as accidents or property damage occur, liability insurance is the barrier that stands between your business and financial calamity. - read more

Start Here !

Knowledgebase

Professional indemnity:
An insurance that provides cover for liability incurred in the course of exercising a profession.

This website is owned and operated by Clark Family Pty Ltd (as Trustee for the Clark Family Trust) 43 Larch Street Tallebudgera QLD 4228, A.C.N. 010281008, authorised Financial Services Representative of Unique Group Broker Services Pty Ltd, Australian Financial Services License 509434. Visit the ASIC website for additional licensing information.

IMPORTANT: We are neither authorised nor licensed to provide finance or financial products and we do not offer any form of credit or other financial advice. All product enquiries and requests for financial and/or other advice on this website are referred to third party intermediaries, insurers and lenders - with whom you can then deal directly. We may receive a fee or commission from these third parties in consideration for the referral. Before any action is taken to obtain a product or service referred to by this website, advice should be obtained (from either the third party to whom we refer you or from another qualified intermediary) as to the appropriateness of obtaining those products having regard to your objectives, financial situation and needs. Whilst we have our own process for vaidating the legitimacy of our referral partners, you should always verify the credentials of your financial adviser before proceeding with recommendations that they may present. Visit the ASIC website for further information.