Insurance-Approved vs Preferred Contractor

The Insurance Contracts Act 1984 and the General Insurance Code of Practice establish the legal framework governing the relationship between insurers and policyholders during the claims process. Understanding your rights under this framework is the first step in asserting your preference for an independent IICRC-certified contractor.

• Section 54 protections: Section 54 of the Insurance Contracts Act 1984 provides that an insurer cannot refuse to pay a claim solely because of an act or omission by the insured after the event, unless the act or omission caused or contributed to the loss. This provision is relevant where an insurer tries to use procedural grounds — such as appointing your own contractor without approval — to reduce or deny a claim that was otherwise validly lodged.
• Insurer's obligations: Under the General Insurance Code of Practice, your insurer must manage your claim fairly and transparently, provide written reasons for any claim decision, and handle disputes through a compliant Internal Dispute Resolution process. They cannot use the contractor appointment process to frustrate your right to a full settlement.
• Right to dispute contractor appointment: While insurers have broad rights to appoint contractors under most policy terms, you have the right to object in writing and request reasons if the appointed contractor is not appropriately certified, is performing work below standard, or has a conflict of interest. A formal written objection preserves your rights under IDR and AFCA.
• Duty of good faith: Both insurer and insured are bound by the duty of utmost good faith under the Insurance Contracts Act. An insurer who appoints a contractor with a commercial incentive to minimise the scope of works — without disclosing this arrangement — may be acting inconsistently with their good faith obligations.

The practical difference between an insurer-appointed restorer and an independent IICRC-certified contractor goes beyond the commercial relationship. It affects the documentation produced, the scope of works assessed, and the long-term outcome for your property.

• Potential conflicts in insurer-appointed arrangements: Insurer-appointed restorers are paid per claim under commercial agreements that may include scope-reduction incentives. There is an inherent tension between minimising cost per claim and delivering a comprehensive restoration scope. This tension is not present in an independent IICRC-certified contractor arrangement where the contractor's obligation is to the property owner.
• Documentation standards — IICRC S500, S520, S700: IICRC-certified contractors are required to document their work to the standards relevant to the damage type: ANSI/IICRC S500:2025 for water damage, S520 for mould remediation, and S700:2025 for fire and smoke damage. This documentation — including psychrometric drying logs, air quality test results, and scope of works — is what insurers and AFCA adjudicators rely on to verify that work was completed to the required standard.
• Psychrometric drying logs: For water and fire claims involving structural drying, a psychrometric drying log is the critical document that confirms the structure was dried to target moisture content. Without this log, the insurer can dispute any secondary damage (mould, structural movement, subfloor deterioration) that arises after the initial restoration — even if the cause was inadequate drying.
• Independent scope reduces dispute risk: An independent IICRC-certified scope prepared before the insurer's assessor attends gives you a documented counter-position for any scope underpayment. This is not available if you allow the insurer-appointed contractor to set the scope without challenge.

Requesting a preferred contractor is most effective when done in writing at the time of claim lodgement. The following steps give you the best chance of the insurer accommodating your preference.

• Written notice at claim lodgement: When you contact your insurer to lodge the claim, follow up in writing (email or letter) stating that you wish to use a preferred contractor and that your preferred contractor is IICRC-certified. Name NRPG as your preferred contractor. Early notice prevents the insurer from committing their appointed contractor before you have raised your preference.
• IICRC certification requirements: When requesting a preferred contractor, specify the relevant IICRC certification: water damage restoration (WRT) or applied structural drying (ASD) under S500, applied microbial remediation (AMRT) under S520, or fire and smoke restoration (FSRT) under S700. Framing the request in terms of certification standards — rather than simply "my preferred builder" — makes it harder for the insurer to refuse.
• If the insurer refuses: Request written reasons for the refusal. If the reason is not a valid policy provision, lodge a formal internal dispute. If the IDR does not resolve the issue, escalate to AFCA. Note that AFCA accepts complaints about contractor appointment processes, not just claim settlement amounts.
• Escalation path: Written preference at lodgement → written refusal from insurer → Internal Dispute Resolution → AFCA complaint. Document every step. AFCA's jurisdiction covers the contractor appointment process where it affects the outcome of the claim.

If work performed by an insurer-appointed contractor is defective, incomplete, or below the standard required by the relevant IICRC standard, you have formal rights to rectification. Follow this process to protect your position.

• Defect documentation checklist: Before raising a rectification request, document every defect in writing: photograph each issue, note the date the defect was observed, describe what the correct standard of work should look like, and reference the relevant IICRC standard if applicable (for example, incomplete drying not meeting S500 target moisture content).
• Written rectification demand: Send a formal written request for rectification to your insurer — not just the contractor. Your insurer is legally responsible for the quality of work performed by their appointed contractor. Address the demand to the insurer's claims department with your claim number. Allow a reasonable time for response (typically 10 business days under the General Insurance Code of Practice).
• AFCA complaint process: If the insurer fails to arrange rectification within a reasonable timeframe, or if the rectification offered is inadequate, lodge a complaint with AFCA. AFCA accepts complaints about the quality of insurer-appointed contractor work and can require the insurer to arrange rectification or provide a cash settlement for the cost of rectification. Include all defect documentation and correspondence with your complaint.
• Independent scope assessment: Obtain an independent IICRC-certified assessment of the defective work. This assessment documents what was done, what the standard requires, and what rectification is needed. This is the most compelling evidence for an AFCA complaint about insurer-appointed contractor quality.