RACQ Insurance Ordered to Increase Payout After Claim Handling Flaws
RACQ Insurance Ordered to Increase Payout After Claim Handling Flaws
0
RACQ Insurance has been instructed to bolster a payout to a customer following a ruling by the Australian Financial Complaints Authority (AFCA).
The dispute arose after the insurer's handling of a house fire claim lodged by a woman in October 2023 was found lacking.
The fire, initiated by scented candles, resulted in significant fire and smoke damage to her home.
The policyholder, who has a disability, reported the fire upon returning from a holiday. Recognising her vulnerability, RACQ assigned her case to their specialised "hypercare" team and provided emergency accommodation. The insurance claim was initially accepted, leading to a $39,074 settlement for damaged contents and the appointment of a builder to conduct necessary repairs.
However, the claimant raised concerns over the quality of the repair work, citing issues such as ceiling damage, poor paint, and protruding nails in the floorboards. An independent consultant recommended further corrective measures, particularly replacement of the kitchen ceiling, nail safety adjustments, and sanding of the floors. When reviewing her concerns, RACQ's assessor acknowledged additional repairs were needed but attributed some of the damages to wear and tear or ground movements rather than the fire incident, offering an additional $7949 for repairs—a sum rejected by the claimant who estimated repair costs exceeding $130,000.
The AFCA concluded that while further fire-related damages were not shown by the claimant, RACQ Insurance had not adequately accounted for the kitchen ceiling replacement in its additional settlement offer. RACQ will now need to secure a quote and cover these costs. The insurer must disburse the $7949 previously proposed, include a 20% increase, and an extra $1500 for items such as toys likely destroyed in the fire.
AFCA also mandated a compensation of $4500 due to the claim handling shortcomings, which included omitting several damaged items from the initial repair scope, resulting in undue delays and emotional distress for the claimant.
Published:Wednesday, 27th Aug 2025 Source: Paige Estritori
Insurance premiums for group life policies with long-term benefits have surged between 15% to 25% on average in the first half of the year, according to a mid-year market update from Marsh Australia. While the steepest increases affected those with adverse claims experiences, short-term rates and premiums for permanent disabilities remained relatively steady. The sector has also become more selective, with insurers adopting stricter underwriting standards, particularly eschewing high-risk industries. - read more
The federal government's initiative to accelerate housing development by relaxing certain building regulations has raised alarm within the insurance sector. Housing Minister Clare O’Neil announced changes on social media, indicating a strategic pause on parts of the National Construction Code to expedite building approvals and encourage the construction of much-needed homes across Australia. This move comes in response to challenges in the approval process, which often delays construction. - read more
RACQ Insurance has been instructed to bolster a payout to a customer following a ruling by the Australian Financial Complaints Authority (AFCA). The dispute arose after the insurer's handling of a house fire claim lodged by a woman in October 2023 was found lacking. The fire, initiated by scented candles, resulted in significant fire and smoke damage to her home. - read more
Running a small trade business in Australia involves various risks, from accidental property damage to unexpected injuries on the job. These unforeseen events can lead to significant financial losses, which might be challenging for smaller enterprises to absorb. That's where comprehensive insurance comes into play. - read more
Public liability insurance is a type of cover that protects businesses and their owners from the financial risks of liabilities that may occur due to damage or injury to a third party. For tradies in Australia, this insurance is crucial due to the nature of their work environment. Working on various sites and handling different tasks increases the likelihood of accidents happening, which makes this type of insurance not only relevant but essential. - read more
Specialized insurance for tradespeople is a form of tailored insurance coverage designed specifically to meet the unique needs and risks that professionals in various trades encounter. This includes trades such as electricians, plumbers, carpenters, and other similar occupations. - read more
Dictionary
Waiting Period
noun
The time period that must pass after filing a claim before the insurance coverage becomes effective or benefits are paid.
