Liability Insurance Australia :: News
SHARE

Share this news item!

AFCA Sides with Homeowners in Landmark Insurance Dispute Over Property Cracks

AFCA Sides with Homeowners in Landmark Insurance Dispute Over Property Cracks

AFCA Sides with Homeowners in Landmark Insurance Dispute Over Property Cracks?w=400

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
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Europ Assistance Australia Now Underwrites Its Own Travel Insurance Policies
Europ Assistance Australia Now Underwrites Its Own Travel Insurance Policies
21 Apr 2026: Paige Estritori
Europ Assistance Australia (EAA) has achieved a significant milestone by obtaining a general insurance licence from the Australian Prudential Regulation Authority (APRA). This development allows EAA to underwrite its own travel insurance products, marking a new chapter in its commitment to Australian travellers. - read more
RACV Highlights Risks of Last-Minute Travel Insurance Purchases
RACV Highlights Risks of Last-Minute Travel Insurance Purchases
21 Apr 2026: Paige Estritori
Recent insights from the Royal Automobile Club of Victoria (RACV) reveal a concerning trend among Australian travellers: 35% are purchasing travel insurance within seven days of departure, with 5% waiting until the day they leave. This last-minute approach can lead to significant gaps in coverage and benefits. - read more
Allianz Partners Highlights Risks of Travelling Uninsured for Australians
Allianz Partners Highlights Risks of Travelling Uninsured for Australians
21 Apr 2026: Paige Estritori
Allianz Partners is calling on Australian travellers to reassess their approach to travel insurance, following research revealing that 14% of Australians embark on overseas trips without any coverage. This statistic is even more pronounced among younger travellers under 30, with 23% travelling uninsured. - read more
Surge in Insurance Complaints Highlights Industry Challenges
Surge in Insurance Complaints Highlights Industry Challenges
21 Apr 2026: Paige Estritori
Recent data from the Australian Financial Complaints Authority (AFCA) reveals a significant increase in consumer complaints against insurance companies, reaching an unprecedented average of 100 complaints per day. This surge is primarily attributed to delays in processing routine claims, rather than issues arising from natural disasters. - read more
Cybersecurity Gaps in Australian Insurance Industry Exposed
Cybersecurity Gaps in Australian Insurance Industry Exposed
21 Apr 2026: Paige Estritori
The latest PwC Insurance Banana Skins Survey indicates that Australian insurers are trailing their global counterparts in preparedness for emerging risks, particularly in the realms of cybersecurity and artificial intelligence (AI). The survey, which gathered insights from 698 insurance executives across 42 territories, reveals that Australian insurers scored 6.6% lower on the Preparedness Index compared to the global industry average. - read more


Business Insurance Articles

Common Myths About Public Liability Insurance Debunked
Common Myths About Public Liability Insurance Debunked
Today, we're diving into the world of public liability insurance, a crucial topic for anyone running a small business or working as a self-employed professional in Australia. - read more
The Cost of Safety: How Much Public Liability Insurance Does Your Australian Business Need?
The Cost of Safety: How Much Public Liability Insurance Does Your Australian Business Need?
As a business operating in Australia, understanding the ins and outs of public liability insurance is not just recommended, it's essential. This type of insurance serves as a safeguard, protecting your business against the financial repercussions of lawsuits and claims arising from third-party injuries or property damage due to your business operations. In a world where one unintended mishap can lead to costly legal battles, public liability insurance stands as your first line of defense. - read more
5 Tips for Reducing Your Liability Insurance Premiums in Australia
5 Tips for Reducing Your Liability Insurance Premiums in Australia
Liability insurance is a crucial form of protection that offers coverage against claims resulting from injuries and damage to people or property. Within the bustling landscape of Australian businesses, possessing this form of insurance is key to financial security and continuity. It acts as a safety net, ensuring businesses can manage risks without bearing the full brunt of potentially costly legal claims. - read more
Understanding The Costs: How Much Does Public Liability Insurance Typically Cost?
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
How Public Liability Insurance Can Save Your Business During a Crisis
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


Start Here !

Start here!

Cover Amount:
Postcode:
All quotes are provided obligation-free by a participating broker from our national referral partner network. We respect your Privacy.

Knowledgebase
Liability Insurance:
A type of insurance that provides protection against claims resulting from injuries and damage to people and/or property.