A dispute over a house fire claim has ended after 10 years with a broker and insurer being ordered by a court to increase the payout.

Defendants in the case, Resilium and AAI Insurance, must pay an extra $73,521 for the damage, but the Victorian County Court has dismissed a claim for consequential loss of rent after the home remained unoccupied following the blaze.

Judge Aileen Ryan says loss of potential rent beyond the policy’s 52-week term is outside the insurance’s scope of indemnity.

Recent cases in NSW have made compelling statements that consequential losses relating to a failure to pay out under an insurance policy “are not generally available”.  

She adds there is no evidence the property can be made habitable, and she accepts the opinions of two engineers that it is “economically irretrievable”.

The fire in the Melbourne suburb of Fitzroy in August 2016 caused extensive damage.

When property owner Rassale Francesco Pty Ltd claimed under its investor home and contents policy, the insurer offered a cash settlement of $101,225 based on a report by loss adjuster Cunningham Lindsey. This included $5510 for 19 weeks’ lost rent.

Resilium and AAI argued this is what it would have cost the insurer to undertake repairs, which it could elect to do under the policy.

Rassale Francesco director Joe Vartuli said the settlement would not cover the repairs and other costs such as loss of rent, and he initially claimed $280,006, later amended to $186,246.

The company was paid $101,225 in May 2021, by which time legal action had begun.

The policy was sold by Resilium “for and on behalf of” AAI in 2015. No distinction was made at trial about the respective liability of each defendant.

Judge Ryan rules they should pay $174,746 overall – $73,521 more, taking into account the 2021 settlement.

The amount is based on an expert’s costing of the loss adjuster’s scope of works and includes $25,000 for roof repairs based on a revised scope of works identified during the trial.  

Read the judgment here.