Hollard Fined $2 Million After Delays Leave Victorian Home Uninhabitable
The Federal Court penalty follows serious failures in handling a storm-damage claim, with ASIC warning insurers that prolonged delays and poor communication can cause significant harm to customers.
Australian insurance company Hollard has been ordered to pay a $2 million penalty after lengthy delays in handling a home insurance claim left a family in regional Victoria living in an uninhabitable property. The Federal Court ruling followed legal action by the Australian Securities and Investments Commission (ASIC), which alleged that the insurer breached its duty of utmost good faith.
The case concerned a couple who lodged a claim in October 2021, two days after a storm damaged their roof. The court found that Hollard failed to assess the damage promptly, delayed repair work and did not adequately protect the property from further damage.
The insurer has also been ordered to cover ASIC’s legal costs, with the penalty payable to the Commonwealth of Australia within 28 days.
Delays and Poor Communication Prolonged the Claim
According to ASIC, Hollard initially accepted the couple’s claim but repeatedly delayed inspections, reports and repair work. The insurer eventually rejected the claim in April 2023, relying on a non-expert opinion despite earlier expert reports outlining the damage.
The court also found that Hollard took too long to arrange temporary accommodation, failed to properly consider expert reports and did not communicate clearly with the customers throughout the claims process.
ASIC argued that the combined failures in decision-making, communication and the consideration of expert advice exposed the couple to unnecessary and prolonged harm. The family remained in an increasingly deteriorated home during the extended process.
ASIC chair Sarah Court said the delays had left the family in limbo for years, with the house now needing to be demolished. She described the case as a warning to insurers about the impact that inadequate claims handling can have on customers experiencing difficult circumstances.
Family Receives Settlement After Escalating Complaint
The couple’s experience continued after Hollard initially offered them a $1,000 goodwill payment in late 2022 to settle the claim.
Following the insurer’s decision to reject the claim, the couple lodged a complaint with the Australian Financial Complaints Authority (AFCA). The complaints body determined that the storm had caused structural damage to the roof.
Hollard subsequently agreed to pay the couple a cash settlement of more than $1.5 million for the total loss of the building, along with temporary accommodation.
ASIC commenced legal action after the settlement was reached. The separate $2 million penalty imposed by the Federal Court is payable to the Commonwealth, rather than being part of the compensation paid directly to the family.
In delivering judgment, the judge described the prolonged experience as stressful and traumatic, noting that the couple had lived in their deteriorating home while the matter continued.
Landmark Penalty Raises the Stakes for Insurers
The ruling marks the first civil penalty ordered against an insurer for breaching its duty of utmost good faith, according to ASIC chair Sarah Court.
The regulator said insurers must handle claims fairly, communicate clearly and make decisions without unnecessary delays. The decision reinforces the importance of considering relevant evidence and managing claims in a way that does not expose customers to avoidable harm.
Hollard, a privately owned insurer, provides motor, home, contents, bicycle, pet and business insurance. Its brands include Everyday Insurance, Real Insurance, Australian Seniors and Steadfast. The company had estimated annual revenue of around $2.3 billion in 2024.
In a statement to the ABC, Hollard acknowledged the court’s findings and apologised to the customer. The company said it regretted the impact of the experience and recognised that its handling of the claim had fallen materially short of its obligations at the time.
What Investors and Policyholders Should Watch Next
The case highlights how claims-handling practices can create legal, financial and reputational consequences for insurers. The $2 million penalty, together with the court’s findings, places a clear focus on timely assessments, evidence-based decisions, appropriate temporary accommodation and communication with policyholders.
For consumers, the ruling underlines the importance of keeping records of insurance claims, retaining relevant reports and escalating unresolved disputes through appropriate complaints channels.
For the wider insurance sector, attention will remain on whether companies can demonstrate that their claims processes meet their obligations and avoid prolonged delays. The Hollard case shows that failures in managing a single claim can lead to significant consequences, particularly when customers are left dealing with an uninhabitable home for years.
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