One of Australia's largest insurers is facing legal action for alleged delays in the storm-damage claim of a couple who were left living in a mould-riddled home.
The property at Scotsburn in regional Victoria, which now requires demolition, suffered roof, porch, bedroom and fence damage during wild weather in late October 2021.
The pair made a claim with Hollard Insurance several days later which has taken almost three and a half years to resolve.
Corporate regulator ASIC has taken Federal Court action against the company, alleging it initially accepted the claim but then rejected it in 2023 based on "non-expert" opinion.
In late 2021, an agent for the company inspected the home, noting damage from "violent" wind and that supporting roof rafters were damaged beyond repair and needed replacing.
According to court documents, the company delayed arranging further works to the home despite being notified original make-safe works had failed to stop leaking.
It is also alleged the company proceeded with an assessment of the roof damage based on the "non-expert" opinion of a file manager, ignoring expert reports.
"Their home became riddled with moisture, mould and decay, was declared uninhabitable and will need to be demolished and rebuilt," court documents say.
"The (couple) were deprived of a fair opportunity to promptly obtain their own expert advice or to engage contractors to repair the roof and potentially to save their home.
"They lived unnecessarily and avoidably exposed to cold, damp and mouldy conditions for many months."
The company took more than nine months to initiate an inspection by a structural engineer and delayed providing temporary accommodation, it is alleged.
ASIC alleges the company breached its contractual obligation to act in good faith.
"This is what we consider a particularly egregious failure to comply with the obligation to deal … with the utmost good faith," ASIC deputy chair Sarah Court said.
"It is quite an extraordinary set of circumstances."
Ms Court said the company could face "significant" monetary penalties and noted complaints against insurers were trending upwards in recent years.
A spokeswoman for Hollard Insurance said it supported ASIC's work and was cooperating with the regulator.
"As this is an ongoing legal matter, we are unable to provide further comment," they said.
ASIC says the couple made a complaint to the Australian Financial Complaints Authority after rejecting a "modest" cash settlement offer in 2023.
The company has since agreed to pay a cash settlement of more than $1.5 million to the couple, covering the loss of the house and temporary accommodation.
