Ombudsman's Decision Favors Claimants in Solar System Dispute

1

The affected homeowners were initially uncertain about what triggered the malfunction, which rendered their solar system inoperable. They speculated that a storm, coinciding with the onset of the problem, was the cause. They enlisted a solar expert's help, who discovered that a main fuse had blown, and the inverters were rendered ineffective due to component burnout.

The expert attributed the damage to an "external weather event," and repair estimates were pegged at $80,436. Conversely, an expert for the insurer, IAG, challenged this assessment by stating that no evidence of a storm impacting the property was found. IAG also dismissed the possibilities of a power surge or electrical distribution influence, asserting the damages likely arose from a generator failure.

Consequently, IAG refused the claim based on their policy, which excludes damages to electronic equipment due to electrical or mechanical malfunctions. Nonetheless, the claimants contended that their solar system shouldn't fall under the 'electronic equipment' category outlined in the policy.

In its assessment, the Australian Financial Complaints Authority (AFCA) recognized the damages as "accidental damage." The authority agreed that while the system could be categorized as both electrical and electronic, the insurance policy included a clause that didn't cover electronic failures "unless the breakdown results in loss or damage to insured property."

AFCA criticized the insurer's stance that portrayed the solar system as a single unit without further collateral damage. The breakdown, starting with the fuse failure, didn't imply all involved systems were inherently linked as one unit. According to AFCA, the generator's issue led to ensuing property damage, leaving the entire solar inverter system and panels inoperative.

Although the ombudsman acknowledged the policy exclusion regarding the generator's main control fuse, they concluded the insurer must cover the remaining damages as they were resultant, and not only limited to the generator.

AFCA encouraged both parties to collaborate on resolving the claim, noting that the claimant's repair quote lacked itemization. IAG was advised to carry out its assessment and assure repairs with a lifetime guarantee. If the homeowners have already undertaken the repairs, the insurer is expected to reimburse their expenses.

Published:Friday, 23rd May 2025
Source: Paige Estritori

Share this news item:

Insurance News

Clear

Code Watchdog Criticises Insurer for Misleading Rejection Letters 24 Jun 2025: Paige Estritori The Life Code Compliance Committee has recently reprimanded a life insurance provider for issuing misleading rejection letters to policy applicants. These letters were deemed 'ambiguous and contradictory' and failed to clearly inform applicants of their review options after being denied coverage. - read more

Insurer Ordered to Pay Full Claim for Confusing Patio Coverage 23 Jun 2025: Paige Estritori A recent ruling mandates that an insurer must fully honor a storm-related claim due to ambiguous policy wording regarding items in open areas. The Australian Financial Complaints Authority (AFCA) determined that the insurer's restriction on coverage for items in a patio area was unfounded, as the policy's phrasing was not clear. - read more

Australia Sees Dramatic Drop in Catastrophe Losses 23 Jun 2025: Paige Estritori Last year saw Australia's insured catastrophe losses plummet to just $500 million, marking the lowest level since 2004, according to Aon's latest Climate and Catastrophe Insight report. Notably, the Insurance Council of Australia reported no disasters for the year, a situation not seen since 1982. This comes in stark contrast to 2023, when disaster-related insured losses soared to over $3.6 billion. - read more

Half a Million Australian Homes at Risk of Becoming Uninsurable, Climate Agency Reports 21 Jun 2025: Paige Estritori The Climate Change Authority has released a concerning report highlighting that, without immediate intervention, extreme natural hazards could cost Australians approximately $8.7 billion annually by 2050. The report urges the federal government to spearhead a comprehensive and well-coordinated national adaptation agenda to mitigate these risks. - read more

Red Sea Unrest: Insurer Denies Cruise Cancellation Claim 20 Jun 2025: Paige Estritori An Australian travel policyholder has been denied a claim payout after his planned cruise in the Red Sea was cancelled due to conflict. The insurer, Southern Cross, invoked its policy's war and violence exclusion clause, as disturbances in the region were linked to military activities, rendering the claim invalid. - read more

Recognition at ACT Insurance Awards Highlights Industry Leaders 18 Jun 2025: Paige Estritori The ACT Insurance Awards have recently acknowledged the standout performers within the insurance sector, with EML Group's Canberra branch receiving the prestigious title of Insurance Leader of the Year. This accolade sets a benchmark in the industry, emphasising excellence and leadership among its professionals. - read more