An insurer has been ordered to cover secondary roof damage to a beachside home after the industry ombudsman found it should have carried out temporary make-safe works – even though it was entitled to reject the original claim for problems caused by nesting birds. 

The Australian Financial Complaints Authority accepted it was unusual that responsibility for preventing further loss and damage should be assigned to the insurer, not the insured, and said; “I emphasise that this finding is confined to the specific circumstances of this complaint”.   

The dispute arose after the homeowners lodged a claim for damage to an eave. Hollard Insurance Partners arranged for builders to inspect the property, but subsequently declined the claim, as the damage had been caused by birds nesting in the roof, an excluded event under the policy.  

AFCA agreed the insurer was entitled to reject the original claim, but found Hollard should have then taken steps to protect the property from further damage. 

The inspection showed a section of the eave had collapsed, leaving a large opening into the roof space. Although the builder’s report described the dwelling as watertight, AFCA said photographs clearly showed that the roof space was exposed and potentially vulnerable to wind-driven rain. 

AFCA said a prudent builder acting for the insurer should have undertaken a temporary repair, particularly given the property’s coastal location. 

It found the repair was unlikely to have been difficult or costly and would have reduced the likelihood of further damage. 

“Insurers generally do not have the same responsibilities to mitigate further loss and damage that insureds have. However, in this particular instance, JL, the insurer’s agent and an experienced builder, was aware of the obvious potential for further damage, was on site, and was likely equipped with the tools to undertake a temporary make safe (because he was equipped for a thorough inspection of the property)”, AFCA said.  

The homeowners said the opening remained exposed for weeks while they waited for the claim decision, resulting in deterioration from wind-driven moisture, salt exposure and heat fluctuations.

After the claim was rejected, they said they made efforts to find contractors but eventually had a family member install a replacement board. 

AFCA accepted that secondary damage was likely to have occurred and found the homeowners had made reasonable attempts to mitigate it. 

It told Hollard to accept liability for any secondary roof damage directly caused by its failure to undertake the make-safe repair.

AFCA also ordered Hollard to pay the homeowners $500 jointly for non-financial loss, finding that the insurer’s failure to make the property safe caused an unusual degree of inconvenience and concern.

Click here for the full ruling.