Bernadette Heald and her family were stuck living in a "broken and disintegrating" storm-damaged Hunter Valley home for two-and-a-half years.
At one stage she even begged insurer Suncorp to move the family, whose two school-aged children have special needs, into temporary accommodation.
That didn't happen until April 2017, well after the house was damaged in a severe storm that hit the Hunter Valley in April 2015.
Ms Heald was worried the house was not safe to live in, but the banking royal commission heard Suncorp did not initially believe it needed to be knocked down and rebuilt.
"It was really tough," Ms Heald told the inquiry on Thursday.
"It was probably after the first brick broke that we had issues because of my daughter's anxiety, she would wake up in the middle of the night terrified that her house was going to fall on her head.
"And it's very hard as a parent to tell her that it's safe. And you don't know yourself," Ms Heald said.
The Healds' son has also had a heart transplant.
The inquiry heard Suncorp initially offered $30,000 to repair the home but the Healds fought to get their own engineering report that recommended the house be knocked down.
Suncorp eventually lifted its cash settlement offer to $635,000, before being told by the Financial Ombudsman Service to pay $744,000.
The Healds are still living in temporary accommodation, but the rebuilding of their home has started.
Ms Heald said the whole insurance claim experience was stressful and frustrating.
"The fact that we had to live in a house for over two-and-a-half years that was broken, that they knew about, and we had two special needs kids which they knew about right from the word go, was atrocious."
Asked how Suncorp got it so wrong, its insurance CEO Gary Dransfield said seeing Ms Heald give evidence was very different to reading the documents about the case.
"Seeing the person that's affected by it - I won't even say claimant because I think that depersonalises it - give evidence puts a human face on what happened, how we failed the Heald family.
"For that, I'm sincerely sorry to the Healds for the impact on them."
Mr Dransfield said too many people were involved in the claim and Suncorp was insufficiently compassionate to the Healds' situation.
Suncorp's general insurance business AAI received 28,000 claims connected to the storm that hit a number of areas in NSW including Sydney, but Mr Dransfield said only nine involved total losses of homes.
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