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 Victoria’s New Building Defect Powers Mean for Strata Communities

11 Jul 2026: Paige Estritori

Victoria has moved another step in its building reform program, with the Building and Plumbing Commission now operating with stronger consumer protection powers and a developer bond scheme scheduled for apartment buildings from 1 July 2027. For strata communities, the announcement is not simply a construction law update. It is a reminder that building quality, defect management and insurance planning are becoming increasingly connected. - read more

Why Policy Details Matter Before a Home Service Claim

11 Jul 2026: Paige Estritori

A recent Australian Financial Complaints Authority decision has delivered a timely reminder for small operators: insurance protection depends on the details being right before something goes wrong. The dispute involved a food delivery business that suffered theft and damage at a site that was not listed on its insurance schedule. - read more

Why Broker Fee Transparency Is Back in Focus for Freelancers

11 Jul 2026: Paige Estritori

Australia’s insurance broking sector is again facing scrutiny over how clearly small business clients are told about broker remuneration. The latest debate follows the release of a draft update to the Insurance Brokers Code of Practice, after earlier recommendations had supported broader disclosure of fees and commissions to individual and small business clients across more insurance products. - read more

Longer Lives, Longer Illness: What It Means for Life Cover

11 Jul 2026: Paige Estritori

Australians are living longer, but new industry research suggests many are also spending more years managing chronic illness. For households thinking about life insurance, that distinction matters. Longevity is positive, but conditions that affect mobility, mental wellbeing, neurological function or the ability to work can place pressure on family finances well before retirement. - read more

Rising Rents Give Landlords a Fresh Reason to Review Risk

11 Jul 2026: Paige Estritori

Domain’s June Quarter 2026 Rent Report has added a new layer to the debate facing Australian landlords: rental growth is accelerating again, but not evenly across the country. For property investors, the headline is not simply that rents are rising. It is that local market conditions, tenant affordability and policy uncertainty are now pulling rental markets in different directions. - read more

Click for more Insurance News