Quake Damage Claims Dismissed Over Previous Faults

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The company behind the claim stated that the properties were impacted by a 5.4-magnitude earthquake that occurred in November 2018. Although the earthquake's epicenter was approximately 45 kilometers away from the buildings, Geoscience Australia specified the evident damage radius to be no more than 27 kilometers from the epicenter.

In their defense, the claimant's engineering expert conceded that the buildings were situated outside the primary damage zone but contended that the earthquake’s vibrations had unleashed energy beneath the geological formations on which the houses stood.

The expert identified "preexisting or dormant conditions" in the properties, including previously repaired damage which, according to him, reopened due to ground movement prompted by the quake, also leading to the manifestation of new fractures.

Meanwhile, Allianz, the insurance provider, enlisted a forensic civil and structural engineer who assessed the damages. His findings revealed brickwork fissures in multiple sections of one property, referred to as House H, and evident cracks within the garage of the second property, termed House P, in addition to a separation between a storeroom and the home.

The engineer hired by Allianz attributed the damage to prolonged foundation instability and deterioration of the mortar used in the brickwork, rather than to the seismic event.

The Australian Financial Complaints Authority (AFCA) upheld the insurer’s position, noting that both engineers corroborated the presence of damage similar to what was being contested even before the 2018 earthquake, specifically in House H.

AFCA further mentioned that updates made to certain rooms within the house remained unaffected, while external brickwork conditions pointed towards significant wear and tear, contributing to the losses. Comparable remarks were also made in regard to House P.

"While both experts agree it is conceivable for House H to incur earthquake-related damage under ideal conditions despite its location outside the designated impact radius, the insurer's expert refuted the existence of such conditions in this case," stated the adjudicator from AFCA.

"Even if the earthquake were recognized as being a proximate cause of the damage to House H, it would coexist with other excluded factors (wear and tear, prolonged structural movement)."

"Consequently, the insurer maintains the right to invoke those exclusions as a basis for denying the claim," AFCA concluded.

Published:Thursday, 1st Aug 2024
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Clear

What PSC’s Transport Broker Investment Means for Truck Operators

02 Jul 2026: Paige Estritori

PSC Insurance Brokers’ investment in MA Insurance Brokers is a timely reminder that transport insurance in Australia is becoming more specialised, more relationship-driven and more closely tied to claims performance. The deal, announced on 25 June 2026, sees MA begin operating as PSC Transport Insurance Brokers, with founders Barry Mathison and Mariann Illyes remaining involved as managing principals. - read more

Cancer Claim Decision Shows Why Policy Wording Matters

01 Jul 2026: Paige Estritori

A new Australian Financial Complaints Authority decision has underlined a point that is easy to overlook when buying personal insurance: a serious diagnosis does not always mean a policy benefit will be payable. The ruling, reported on 29 June 2026, involved a claimant who sought benefits after being diagnosed with high-grade urothelial carcinoma of the bladder. Although the illness was serious and required treatment, AFCA found the insurer was entitled to rely on the specific wording of the policy. - read more

What Renewal Price Transparency Means for Boat Owners

01 Jul 2026: Paige Estritori

A new review by the General Insurance Code Governance Committee has put renewal pricing transparency back under the spotlight, with findings that matter well beyond home and motor policies. For Australian boat owners, the message is simple: when your policy renewal arrives, the payment frequency can be just as important as the headline premium. - read more

What IAG’s Modular Shelter Move Means for SMEs

01 Jul 2026: Paige Estritori

IAG’s latest investment through Firemark Ventures is a useful signal for Australian business owners: disaster recovery is no longer just about paying claims after the event. It is increasingly about helping people and enterprises stay operational, connected and on-site while rebuilding happens around them. - read more

Life Insurance Code Review Puts Mental Health and Claims Fairness in Focus

01 Jul 2026: Paige Estritori

Australia’s life insurance sector is facing another important reform moment after the independent review of the Life Insurance Code of Practice released its final report on 30 June 2026. The report, led by former senior regulator Peter Kell, makes 85 recommendations aimed at improving how life insurers communicate, design products, handle claims and support customers who may be vulnerable. - read more

Click for more Insurance News