Quake Damage Claims Dismissed Over Previous Faults

3

The company behind the claim stated that the properties were impacted by a 5.4-magnitude earthquake that occurred in November 2018. Although the earthquake's epicenter was approximately 45 kilometers away from the buildings, Geoscience Australia specified the evident damage radius to be no more than 27 kilometers from the epicenter.

In their defense, the claimant's engineering expert conceded that the buildings were situated outside the primary damage zone but contended that the earthquake’s vibrations had unleashed energy beneath the geological formations on which the houses stood.

The expert identified "preexisting or dormant conditions" in the properties, including previously repaired damage which, according to him, reopened due to ground movement prompted by the quake, also leading to the manifestation of new fractures.

Meanwhile, Allianz, the insurance provider, enlisted a forensic civil and structural engineer who assessed the damages. His findings revealed brickwork fissures in multiple sections of one property, referred to as House H, and evident cracks within the garage of the second property, termed House P, in addition to a separation between a storeroom and the home.

The engineer hired by Allianz attributed the damage to prolonged foundation instability and deterioration of the mortar used in the brickwork, rather than to the seismic event.

The Australian Financial Complaints Authority (AFCA) upheld the insurer’s position, noting that both engineers corroborated the presence of damage similar to what was being contested even before the 2018 earthquake, specifically in House H.

AFCA further mentioned that updates made to certain rooms within the house remained unaffected, while external brickwork conditions pointed towards significant wear and tear, contributing to the losses. Comparable remarks were also made in regard to House P.

"While both experts agree it is conceivable for House H to incur earthquake-related damage under ideal conditions despite its location outside the designated impact radius, the insurer's expert refuted the existence of such conditions in this case," stated the adjudicator from AFCA.

"Even if the earthquake were recognized as being a proximate cause of the damage to House H, it would coexist with other excluded factors (wear and tear, prolonged structural movement)."

"Consequently, the insurer maintains the right to invoke those exclusions as a basis for denying the claim," AFCA concluded.

Published:Thursday, 1st Aug 2024
Source: Paige Estritori

Share this news item:

Insurance News

Clear

Australia to Explore European Flood Insurance Schemes Amid Rising Coverage Challenges

22 Oct 2025: Paige Estritori

Australia is set to explore international flood insurance schemes as challenges in securing coverage in high-risk areas grow. Financial Services Minister Daniel Mulino revealed that Australia will assess models like Flood Re in the UK and several European approaches in countries such as Italy, France, Germany, and Switzerland. This move comes amidst increasing difficulties for high-risk properties to obtain insurance coverage. - read more

Life Insurance Sector to Develop New Mental Health Claims Framework

21 Oct 2025: Paige Estritori

A significant update is on the horizon for mental health claims within the Australian life insurance sector. The Council of Australian Life Insurers (CALI) has announced the creation of a new assessment framework. This move will be developed in collaboration with consumer advocates, medical specialists, and other key stakeholders. The forthcoming plan aims to establish minimum standards for evaluating claims, ensuring that they are based on consistent and evidence-based criteria. - read more

WFI and AgCarE Join Forces to Reward Sustainable Farming Practices

21 Oct 2025: Paige Estritori

In a significant move towards promoting sustainable agriculture, WFI Insurance has partnered with AgCarE, a certification program developed by AgForce, to offer premium reductions to farmers who achieve AgCarE certification. This collaboration aims to enhance financial, environmental, and social outcomes for Australian farmers and rural communities. - read more

Rising Insurance Costs Challenge Australian Farmers as Extreme Weather Intensifies

21 Oct 2025: Paige Estritori

Australian farmers are confronting a significant surge in insurance premiums, a trend largely attributed to the increasing frequency and severity of extreme weather events. Over the past few years, many farmers have reported that their insurance bills have more than doubled, with annual premiums exceeding $100,000. - read more

Diversifying Small Farms Open New Avenues for Insurance Brokers

21 Oct 2025: Paige Estritori

The landscape of Australian agriculture is evolving as small commercial farms increasingly diversify their operations to enhance income and sustainability. This shift presents both challenges and opportunities for insurance brokers, as new ventures introduce complex risk management needs. - read more

Click for more Insurance News