A couple have won a payout of more than $150,000 after a dispute with Allianz over damage to their townhouse caused by a burst hot water pipe.

After the homeowners discovered the problem with the subfloor pipe in April 2024, they hired a plumber who conducted repairs and found extensive dampness and mould in the area.

In the days following the plumber’s repairs, the couple found further damage, including to timber and tile flooring. There was movement in the walls and ceilings, and a strong mould odour throughout the ground floor.

They said this damage was worsened by their insurer’s failure to complete make-safe or drying work, plus prolonged delays in settlement.

Allianz accepted the burst pipe caused the damage to some flooring and internal finishes, but it disagreed on the mould, subfloor timber deterioration, building movement and particleboard flooring issues.

Its engineer concluded the mould patterns and overall deterioration were probably caused by “prolonged moisture exposure and subfloor environmental deficiencies, rather than the burst pipe”.

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The claimants’ assessor argued the damage was consistent with the pipe failure releasing water and steam into a confined space, worsened by the lack of drying or make-safe work.

The assessor criticised the insurer’s expert for relying on “untested assumptions” to support their conclusion. Another engineer hired by the claimants said the expert findings were “erroneous”.

In a dispute ruling, the Australian Financial Complaints Authority accepts the burst pipe probably caused the loss.

It notes the claimants did not previously flag issues with mould or internal movement, despite living at the property for more than a decade.

The complainants argued settlement should be based on three quotes ranging from $148,060 to $158,776. The insurer had offered $121,374.

The ombudsman finds the homeowners’ quotes appropriate and says the claim should be settled at the average of the three, which is $151,778.

Allianz must also pay for temporary accommodation during repairs, $5000 for the couple’s professional costs, and $4000 compensation for stress caused by its claims handling. 

See the ruling here.

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