An 11-year-old boy asked to list the property in his bedroom is among those subjected to a "cruel" approach by insurers assessing losses from the recent NSW bushfires, the state's attorney-general says.
But following Legal Aid NSW intervention, solicitors and insurers have reached an agreement where residents affected by the recent bushfires will not have to itemise their losses.
Legal Aid lawyers have provided free legal advice to fire-affected residents at a disaster recovery centre at Springwood, in the Blue Mountains, and over the phone.
They have also helped manage disputes between residents and insurance companies.
NSW Attorney-General Greg Smith said one dispute involved a insurance company falsely informing customers any payment for temporary housing would be deducted from the final insurance payout.
"This would have potentially prevented families from being able to afford to rebuild their homes," he said in a statement.
"When the insurer realised their mistake they retrained staff and contacted customers to advise them they were entitled to up to 52 weeks of payment for temporary accommodation, offering an immediate lump sum payment of the entitlement.
"I thank the insurance companies concerned for working with Legal Aid solicitors to resolve the issues, helping fire victims and speeding up their claims."
Mr Smith said in one case an 11-year-old boy was asked to itemise the contents of his bedroom.
"In other cases, insurance companies asked for photos or receipts to support claims for items lost in the fires," he said.
"This sort of approach to bushfire victims is cruel and unnecessarily adds to the trauma they have suffered."
According to the Insurance Council of Australia, more than 1040 claims have been lodged following the bushfires.
This week losses were estimated at $145 million.