A strata insurer has been ordered to pay a cyclone damage claim after the industry ombudsman ruled it cannot withhold payment until homeowners complete maintenance work.

Strata Community Insurance Agencies accepted liability for water damage to a unit caused by Cyclone Alfred, but it wrongly refused to settle until maintenance issues identified during inspections were rectified, the Australian Financial Complaints Authority says.

The unit suffered water ingress during the 2025 storm, damaging a downstairs kitchen wall and an upstairs bedroom and walk-in wardrobe.

The insurer argued repairs should not proceed until issues with roof cappings, window seals, stormwater drainage, solar panel installation and gaps near a concrete path were fixed to reduce the risk of future leaks.

But AFCA says that while policy exclusions allow claims to be declined when poor maintenance or building defects cause damage, “they do not allow the insurer to refuse to settle an otherwise claimable loss until maintenance is undertaken”.

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AFCA’s adjudicator notes the insurer’s experts consistently identified Alfred as the cause of the water ingress.

“The insurer’s expert said internal repairs should not be carried out until maintenance was completed. I do not discount that this may be sensible as a practical matter.

“However, the insurer is not entitled under the policy to withhold settlement pending maintenance works.”

AFCA notes the insurer could have chosen to cash settle if it had concerns about future damage, rather than delay settlement.

The insurer has been ordered to pay $3436 for the internal damage claim, plus interest from October 14 last year, and $1500 compensation for non-financial loss after AFCA found its claim handling unnecessarily prolonged the dispute and caused stress and inconvenience.

See the full ruling here.