The George IV Inn did not have flood insurance and this is why its claim was for a payout following the June 5 storm last year was rejected, the insurance company Assetinsure said in a statement released on Wednesday.
Chief executive Gregor Pfitzer said Assetinsure would not normally comment on any individual claim but had made an exception in this case because of the ‘understandable’ public interest from a lot of patrons of the George.
“Our position has been consistent from day one, that any damage assessed to have been caused by flooding is not covered,” Mr Pfitzer said.
“The policy was renewed in 2015 with the same exclusion for flood damage, and no request for flood cover was made.
“Following a thorough assessment of the damage sustained at the hotel – Assetinsure has rejected the claim for flood damage.”
The statement said Assetinsure's policy specifically excluded flood damage.
Last week the owner of the George, Patrick Moloney, told residents the insurers had refused the claim and therefore he had to terminate all staff contracts.
Mr Moloney has labelled Assetinsure’s statement as “incorrect” and “disingenuous”.
He said Assetinsure initially accepted liability for stormwater damage up to 100mm above floor level across the pub.
“Two events occurred on June 5, the first being stormwater inundation,” Mr Moloney said.
“Before Stonequarry Creek burst its banks, stormwater from the rain flooded the pub because the George’s drain pipes could not cope, water came off the roof and the stormwater public system was also unable to cope,” he said.
“About an hour later, the creek’s banks broke and flooded some of the town, including the pub.”
Mr Moloney said the insurers initially told him in writing they would cover stormwater damage, not flood damage.
He therefore put in a claim regarding the stormwater damage excluding flood damage.
“In the claim we ignored the flood damage and made the claim based on what Assetinsure said they would cover,” Mr Moloney said.
“I hired experts, builders and engineers to write reports which cost about $180,000, which we included in the claim.
“I also paid the staff because Assetinsure said they would respond to business interruptions.
“Throughout the six months, we kept in constant dialogue with the insurers and they directed us to what works should be undertaken and what would be covered and what elements would support the claim.
“In mid-December we lodged the claim and on the same the insurers denied all liability.”
The hotel has been closed for more than six months.
“On a practical level, if the insurance company had said they would not cover anything from the start then we would have deployed all our capital to rebuilding the hotel,” Mr Moloney said.
“Then we could have been trading within two to three months.
“We would have benefited from the Christmas trade, which was our busiest time of year.
“We would have still had to deal with our damage but we would have been operational.”
Mr Moloney said it was too early for him to decide if he would try and sell the George.
“I have been told by brokers that it is not saleable in its current state,” he said.
“I would likely have to break it off bit by bit, which would mean it would not be operational as a hotel again.
“I would likely have to sell off the liquor and gaming licence and the building would become just a property with a fence around it.
“That would be a real shame because the pub has been operating continuously for 170 years.”
Read Assetinsure’s full statement here.