A cash-strapped homeowner has failed in a bid to claim $35,000 from her insurer to cover faulty work carried out by an unlicensed and uninsured builder.

The woman engaged the contractor in 2024 to concrete around her pool and at the side of her house, agreeing to pay $13,750.

Almost immediately after labourers had left, she noticed cracking, crumbling concrete, pooling water and damage to fencing.

Rectification did not occur, despite requests, and the NSW Civil and Administrative Tribunal ordered the contractor to pay $26,958 to cover repairs.

However, the debt remains unpaid and the woman lodged a claim with Hollard, arguing the loss should be covered as malicious damage. She did not have optional cover for accidental damage.

Hollard declined the claim, saying that under its policy a “malicious act” required an intention to cause damage or reckless disregard by a person at the property without the insured’s consent.

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It said the contractor had consent and the damage arose from defective work, not an intentional act.

The homeowner took her case to the Australian Financial Complaints Authority, but the ombudsman has backed the insurer.

“I am not satisfied the complainant has shown that the contractor intended to cause loss or damage to the property,” an AFCA adjudicator said.

“Performing unlicensed, defective and/or negligent works does not demonstrate an intention to cause damage.

“While it is arguable the contractor had a reckless disregard for the consequences, this is a high bar... Based on the available material, I am not satisfied the contractor knowingly or intentionally disregarded the risk of causing damage to the property.

“Even if I were to accept that the damage occurred due to a ‘malicious act’, the claim is not covered under the policy because the contractor attended the property and performed the works with the complainant’s consent.”

AFCA has also denied the woman’s bid for non-financial loss compensation, finding the insurer “handled the claim reasonably” within industry standard time frames.

The authority notes the claimant suffered financial hardship and vulnerabilities.

“I empathise with her position and acknowledge this has been a very difficult and stressful situation for her,” the ombudsman said.

“However, I consider her stress arises primarily from the actions of the contractor, not the insurer.”

See the full ruling here.