An insurer must repair bedroom wall cracks contaminated with odour after a dead body was left for nine days at a homestead in remote Queensland, but it does not have to declare a total loss, the industry ombudsman has ruled.

QBE offered a $468,000 cash settlement under a farm pack policy in August 2024 after a company director unexpectedly died at the property on New Year’s Day.

But this was rejected, and the director’s son and wife took their case to the Australian Financial Complaints Authority, asking that QBE deem the damage a total loss.

They wanted a payout covering the building’s full sum insured of $500,000, plus removal of the home, and hundreds of thousands more for accommodation costs and contents.

QBE's rejected offer had comprised contents ($110,000), temporary accommodation ($100,000), building remediation ($50,975), hygienist costs ($6875), building reinstatement ($157,447) and a 20% contingency uplift ($43,060).

The family said they were “profoundly impacted” when they attempted to clean the home following discovery of the man’s death alone at the property, where access was cut off due to summer floods. It was weeks before the property was assessed.

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They said they were particularly sensitive to odour following exposure when attempting to clean the property, and QBE’s experts “cannot guarantee removal of odour molecules embedded into soft materials”.

An AFCA panel has noted the “deeply distressing circumstances” but says the family have not established total loss.

“The panel acknowledges the significant trauma they have suffered ... for personal reasons, the complainant may wish to rebuild or relocate the property,” the authority said. “However, in assessing the insurer’s obligations, regard must be had to the terms of the policy.”

AFCA says QBE’s repair quotes “provide consideration of the issue of the odour” by allowing for the removal of semiporous building materials – including wall linings, subfloor and door jambs – and a two-stage decontamination process for remaining structural materials and contents.

But the authority has rejected QBE’s argument it can only cash settle the claim due to building movement.

“It says it is unable to warrant the works due to the pre-existing cracking present at the property. However, the panel does not accept that the cracking damage prevents QBE from undertaking the repairs.

“It is likely that the odour has also contaminated the cracking which is in the bedroom and therefore needs to be repaired because of the insured event ... The panel is not satisfied that a cash settlement with a contingency uplift sufficiently addresses this risk.

“QBE should complete the repairs to the property, including the cracking damage.”

AFCA says the policyholder can choose one of three independent restorers, or can take a cash settlement based on quotes for repairs to the bedroom cracking and post-remediation verification, plus a 20% contingency uplift.

See the ruling here.