Hollard Fined $1.4 Million After Claim Delays Leave Australian Family in Uninhabitable Home

Key Takeaways

• $1.4 Million Penalty: Australia's Federal Court ordered Hollard Insurance Partners to pay approximately $1.4 million (AUD 2 million) for serious failures in handling a home insurance claim.
• Years of Delays: Hollard took 15 months to reverse its initial acceptance of the claim and more than three years to finalize payments to the affected family.
• Home Rendered Uninhabitable: Prolonged delays and inadequate claims handling left a Victorian family living in a storm-damaged home that deteriorated from moisture, mold and decay.
• First-of-Its-Kind Penalty: ASIC said the ruling marked the first civil penalty imposed on an Australian insurer for breaching its duty of utmost good faith.
• Insurer Admits Failures: Hollard acknowledged extensive delays, periods of inaction and poor communication, including delays in obtaining an engineering assessment and providing temporary accommodation.

Deep Dive

An Australian insurer has been ordered to pay approximately $1.4 million (AUD 2 million) after admitting to serious failures in handling a storm damage claim that left a Victorian family living in a deteriorating home for years.

The Federal Court imposed the penalty on Hollard Insurance Partners Limited following proceedings brought by the Australian Securities and Investments Commission (ASIC). The regulator announced the decision on October 9, describing it as the first civil penalty imposed against an insurer for breaching its duty of utmost good faith.

The family's claim began in October 2021, when a storm damaged the roof of their home in regional Victoria. Hollard initially accepted the claim but reversed its position 15 months later, rejecting it after a prolonged period of delays and poor communication.

By then, the property had deteriorated considerably. Moisture, mold and decay had spread through the house, which was eventually deemed a total loss. Hollard ultimately paid approximately $1.08 million (AUD 1.55 million), including payments reflecting the total loss of the home. More than three years passed between the initial claim and the finalization of those payments.

In late 2022, after the family complained directly to Hollard, the insurer offered approximately $698 (AUD 1,000) as a goodwill payment to settle the complaint. The family rejected the offer and subsequently complained to the Australian Financial Complaints Authority (AFCA).

Months of Delays and a Deteriorating Home

The court examined failures that began shortly after the claim was lodged and continued as the condition of the property worsened. A structural engineering assessment was recommended following the initial inspection, but it was not carried out until August 2022. Justice Button noted that approximately eight months passed between the identification of the need for an engineer and the appointment of one.

Hollard did not make its final decision on the claim until April 2023. The insurer admitted to extensive delays, periods of inaction and poor communication throughout the process, including delays in providing temporary accommodation. Meanwhile, the family continued living in a home increasingly affected by moisture and mold.

"The saga experienced by the Insureds was extended and must have been stressful and traumatic," Justice Button said. "They were given the runaround in more ways than one, and lived in their ever-deteriorating home, as the saga wore on."

The judge was particularly critical of the delay in appointing an engineer and the lack of progress while the property continued to decay.

"Some aspects of the contravening conduct are hard to fathom," he said.

Justice Button found that the delays could not be explained simply by staff workloads or poor communication with suppliers. He also drew attention to the imbalance of power between insurers and policyholders, particularly when a family home is at stake.

"The capacity for harm to come to insureds holding home insurance is particularly acute given the value of the home as an asset in many Australian households, and the power disparity between insurer and insured in progressing claims," he said. "It is incumbent on insurers to ensure that their claims handling accords with the duty of utmost good faith. Hollard's contravening conduct here fell well short of that standard."

Court Delivers First Penalty Under Duty of Utmost Good Faith

ASIC commenced proceedings against Hollard in April 2025, alleging breaches of Section 13(2A) of the Insurance Contracts Act 1984. Hollard admitted that its handling of the claim breached the statutory duty of utmost good faith, including through prolonged delays, inadequate communication and failures to progress the claim while the family's home deteriorated.

ASIC Chair Sarah Court said the ruling demonstrated the consequences of serious claims-handling failures and warned insurers against allowing policyholders to remain in prolonged uncertainty.

"Hollard's serious claim handling failures left a family in limbo for years and living in a home that was uninhabitable," Court said. "When Australians make an insurance claim, they are often facing some of the most difficult times in their lives. This decision confirms that insurers must act fairly, communicate clearly and make decisions without unnecessary delay, and must put their customers first."

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