Hail the (Insurance) Fraud Finding

On 25 December 2011, a catastrophic hail storm struck metropolitan Melbourne, resulting in widespread property damage. The storm also gave rise to an unprecedented number of fraudulent insurance claims.

Indemnity disputes arising from hail damage claims are usually determined by the Financial Ombudsman Service. In the absence of directly relevant case law there has been uncertainty within the industry as to whether insurers can deny claims with some manufactured 'hail' damage in their entirety, or whether they must pay to repair the proportion of damage that was genuinely caused by hail.

In this unreported decision of the Magistrates Court of Victoria, it was held that an insurer is entitled to deny indemnity on the basis of fraud where an insured claims for manufactured damage, even where there is a relatively high proportion of genuine hail damage.