Liability Insurance Australia :: News

Share this news item!

Partial Settlement Reached in Homeowner's 'Slow Leak' Insurance Dispute

⚠️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.

A recent ruling by the Australian Financial Complaints Authority (AFCA) has determined that Auto & General Services must cover a portion of a homeowner's insurance claim related to long-term water damage caused by a leaking pipe.

The decision comes after a protracted dispute regarding the coverage of damages arising from a leak that reportedly developed over 12 months, spanning both before and during the insurance policy period.

The homeowner discovered a large pool of water in the laundry area and made a claim with the insurer in February last year, shortly after the policy's inception in January. Upon investigation, it was found that the leak originated from a pipe situated between the bathroom and laundry walls. The damage included significant mould growth and timber deterioration, suggesting the leak had been ongoing.

Initially, Auto & General rejected the claim, arguing that the leak pre-dated the policy start date, thus falling outside the coverage scope. However, AFCA’s ruling contended that the crucial factor was the manifestation of loss or damage during the insured period, not the precise start of the leak.

AFCA highlighted ambiguities in the timing and progression of the damage, stating that the available documentation did not clearly delineate the timeline. While Auto & General’s assessment posited the leak was long-standing, the ruling acknowledged that some damage coincided with the policy period and required partial coverage. Consequently, it directed the insurer to pay for 50% of the repair costs.

This determination underscores significant implications for consumers and insurance providers alike. For policyholders, it highlights the importance of understanding policy nuances and the potential for claims adjudication in ambiguous situations. For insurers, it serves as a reminder of the necessity for clear communication and comprehensive documentation in resolving claim disputes. The ruling sets a critical precedent in interpreting policy terms where ongoing damage originates from before the coverage period but manifests during it.

As this decision reverberates through the industry, insurers may need to reassess policy wording and adjust communication strategies to minimize disputes. The resolution of such claims could involve more detailed investigations to establish timelines and causation more definitively. Moving forward, stakeholders should anticipate closer scrutiny of claims involving long-term damage, emphasizing the need for enhanced clarity and transparency in policy documents.

The AFCA ruling not only explicates this specific case but also paves the way for more balanced adjudications that account for the complexities inherent in prolonged damage claims, potentially influencing future policy clauses and dispute resolutions.

Published:Thursday, 1st May 2025
Source: Paige Estritori

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

Share this news item:

Insurance News

Call for Enhanced Support for Indigenous Insurance Customers

09 Dec 2025: Paige Estritori

The Life Code Compliance Committee has identified significant gaps in support for Indigenous customers within the insurance sector, following an audit of three major insurers representing two-thirds of the market. The analysis reveals that these insurers lack adequate procedures for safe self-identification, a critical step towards ensuring cultural inclusivity and accessibility. - read more

Australian Insurtech Startups: Pioneering the Future of Insurance

09 Dec 2025: Paige Estritori

The Australian insurtech sector is experiencing significant growth, with startups introducing innovative solutions that enhance efficiency, security, and customer engagement within the insurance industry. A recent report titled 'Insurtech Down Under: Trends, Tech and Triumphs' highlights the pivotal role these companies play in reshaping the market. - read more

Australian Insurers Address Surge in Mental Health Claims

09 Dec 2025: Paige Estritori

The Australian insurance industry is facing unprecedented challenges due to a significant rise in mental health-related claims. The Council of Australian Life Insurers reports that mental health has become the leading cause of total and permanent disability claims, accounting for nearly one in three payouts. - read more

Calls for Overhaul in Australian Insurance Claims Handling Processes

09 Dec 2025: Paige Estritori

Australian consumer advocacy groups are intensifying their calls for substantial reforms in the insurance industry's claims handling processes. The Australian Consumers Insurance Lobby (ACIL) has criticised the current system, highlighting ongoing issues that compromise consumer outcomes. - read more

WFI Insurance Rewards Sustainable Farming with Premium Discounts

08 Dec 2025: Paige Estritori

In a significant move towards promoting sustainable agriculture, WFI Insurance has announced a new initiative offering premium discounts to farmers who obtain AgCarE certification. This program, developed by AgForce, aims to recognise and reward farmers implementing eco-friendly practices on their properties. - read more

Click for more Insurance News

Business Insurance Articles

Why Every Business Needs Public Liability Insurance

Welcome to our comprehensive guide on public liability insurance. If you run a business, you've probably heard this term thrown around quite often. But what exactly is public liability insurance? - read more

Insurance Essentials: Protecting Your Small Business with Public Liability Coverage

Running a small business in Australia comes with its own set of challenges and risks. One crucial aspect that should never be overlooked is insurance, particularly public liability insurance. The reason is simple: it offers essential protection against claims of property damage or personal injury caused by your business operations. - read more

Understanding the Key Factors Influencing Your Liability Insurance Premiums

Liability insurance is a form of coverage that protects businesses against claims resulting from injuries and damage to people or property. It provides crucial peace of mind, ensuring that your business is shielded from potentially devastating financial losses due to lawsuits or claims against it. - 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

Decoding Public Liability Insurance: Is It a Must-Have for Your Australian Startup?

Public liability insurance is an integral safety net designed to protect businesses from the financial risks associated with lawsuits or claims. It provides coverage when a business is found legally responsible for personal injury to a third party or damage to their property. This form of insurance can significantly reduce the burden of legal fees, compensation claims, and other associated costs that may arise from unforeseen incidents. - read more

Start Here !

Knowledgebase

Subrogation:
The process by which an insurance company seeks to recover the amount paid to the policyholder from a third party responsible for the loss.

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.