Pat Hennessy, of Gunnedah, has been awarded tens of thousands of dollars in damages after taking Elders Insurance to court when it refused to pay for repairs to his partially collapsed house.

One side of Mr Hennessy's house sank 5 centimetres after rainwater from a severe storm in November 2008 washed through the property, inundating its foundations.

"We got about 100ml in two hours – the streets were running like rivers," he said.

Elders Insurance said the damage had been caused by groundwater, not stormwater, and soil subsidence had caused the eastern wall of the house to drop.

Mr Hennessy started legal proceedings in Gunnedah Local Court in June 2009. His claim was heard on February 4.

Magistrate Michael Connell found in favour of Mr Hennessy. He ruled the damage was covered by the Elders policy.

Mr Hennessy's solicitor, Peter Long, of Slater and Gordon, said the court battle was a victory for the average home owner.

"Many people don't have the resources to get legal advice and then to prosecute the insurance company, which has deep pockets," Mr Long said.

The company was forced to pay tens of thousands of dollars in damages and Mr Hennessy's legal costs.

Mr Hennessy said the soil couldn't handle the volume of water.

"When I moved in to clean the damage ... there were cracked cornices and the eastern side of the house had sunk noticeably. You couldn't even close the doors."

Three months after he lodged his claim, it was rejected by Elders Insurance, who said the damage was caused by gradual soil "subsidence".

This term is normally used to describe land that sinks because of prior excavation, such as that related to a mine site.

"Obviously, my house wasn't built over a mine," Mr Hennessy said.

Mr Long said home owners affected by recent storms would find solace in the magistrate's findings.

Elders Insurance declined to comment on the case.