Navigating Complex Strata Insurance Claims
- Declan Robinson
- 1 day ago
- 4 min read
Managing an insurance claim for a strata property is rarely straightforward. Insured parties will often accept an insurer’s initial assessment, assuming it fully captures the extent of the loss.
As the case study below demonstrates, understanding the nuances of insurance claim disputes and the AFCA complaint process can be the critical difference between a claim that stalls and one that reaches a fair settlement.
In this case, the claim was complicated by multiple causes of loss, including malicious damage followed by water damage, compounded by the property remaining vacant. Together, these factors significantly increased the complexity for the policyholder.
The Situation: A Strata Insurance Claim Dispute
This claim involved a strata property that experienced two consecutive damages. First, a tenant caused significant malicious damage to the unit. During the subsequent removal of the tenant’s effects and initial clean-up, a plumbing fixture was disturbed, leading to a secondary water damage insurance claim.
Because the property remained unoccupied for several months, the water damage worsened, creating a complicated chain of damage and responsibility.
The Insurer’s Initial Position
Whilst the insurer offered an initial compensation payout of $22,000, the cost of the damage exceeded this amount. The lower initial settlement offer resulted from disputed repair scopes and the omission of additional policy extras that were not included by the insurer's loss adjuster. Consequently, the client sought to engage Pharos Loss Management to pursue the full entitlement through detailed assessment and expert advocacy. In complex cases like this, it is common for initial payments to cover only the obvious losses, while securing the full entitlement requires detailed assessment, persistence, and expert advocacy.
Why Strata and Domestic Claims Often Stall
Disputes over domestic and strata insurance claims remain a persistent challenge for policyholders across Australia. According to the Australian Financial Complaints Authority’s (AFCA) 2023-24 Annual Review, general insurance complaints remain extremely high, with 29,335 matters received, and delays in claim handling continue to be the largest source, accounting for 25% of cases.
Common reasons claims stall include:
Complexity of Causation: Distinguishing between different loss events requires technical expertise.
Adversarial Adjusting: Insurers often adopt a “denial-first” approach, particularly for vacant or complex properties.
Lack of Expertise: Policyholders may not have the knowledge to interpret policy wording or respond to adjuster reports effectively.
The Pharos Approach: Strategy over Stress
When the insured engaged Pharos Loss Management, our goal was to ensure the claim was fully and fairly assessed, using the available evidence and policy wording to present a clear and objective case to the insurer.To achieve this, we followed a structured approach focused on securing immediate relief, maximising the claim outcome, and addressing complex technical and legal issues.
1. Securing Immediate Cash Flow
One critical step in claims management is securing undisputed funds. Our first priority was to secure payment of $22,000 for the client, which they were unaware was possible, while we tackled the more complex aspects of the claim. Through detailed analysis and expert negotiation, Pharos Loss Management secured an additional $50,000 for the client, bringing the total settlement to $72,000. Furthermore, we successfully negotiated a range of additional benefits often overlooked in cash settlements, including lot owner contributions, electricity usage incurred during the repair process, and a general contingency for lack of warrant.
2. A "No Win, No Fee" Framework
For many domestic and strata claimants, the cost of hiring experts can be a barrier. Pharos Loss Management operates on a contingency fee basis; contingency fee basis: our fee applies only to additional value achieved beyond the insurer’s initial offer. This aligns our success directly with the client’s outcome.
3. Technical Causation and Policy Interpretation
As specialists with backgrounds in engineering and law, we prepared a detailed submission that addressed:
Proximate Cause: Explaining how and when the water damage occurred based on factual evidence.
Policy Response: Addressing vacancy clauses cited by the insurer to limit liability.
Interest Calculations: Australian insurance law may entitle insured parties to interest on delayed payments.
The Resolution Path: The AFCA Dispute Process
When internal negotiations reach a deadlock, claims can be escalated through the Australian Financial Complaints Authority (AFCA), which provides a free, independent service for resolving insurance disputes.
For this claim, Pharos Loss Management managed the AFCA process, including:
Drafting formal submissions.
Coordinating documentation and correspondence.
Responding to the insurer’s technical evidence.
The Outcome
After approximately nine months of rigorous advocacy, the insured achieved a successful settlement:
Initial Settlement: $22,000
Additional Recovery: $50,000.
Total Settlement: $72,000.
The claim was resolved successfully, achieving a full and fair settlement without resorting to expensive court proceedings.
Key Takeaways for Policyholders
Insurance disputes are not only about the loss itself, but also about process, persistence, and understanding how your insurance policy terms apply to your specific claim.
Securing undisputed amounts early maintains cash flow.
Professional engagement models, such as no win, no fee arrangements, reduce financial risk.
Escalating claims through the correct channels, including AFCA, helps achieve fair settlements.
For policyholders facing storm damage, roof damage, or complex strata claims, these steps can make the difference between financial stress and a full recovery.
Need Help With Your Claim?
If your claim has stalled, been partially accepted, or even denied, we could help you. Reach out to Declan Robinson for a confidential discussion about your options and next steps.
Declan Robinson, Managing Director
Contact Details:
+61 478 087 092
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