Hundreds of residents left homeless after a storm ripped off the roof of their Lidcombe apartment block have suffered another blow, with their insurer rejecting their multi-million dollar claim.

Insurance giant AIG has denied payouts to repair the building - developed by controversial Auburn councillor Ronney Oueik - because its expert found it did not comply with the Building Code of Australia.

Structural engineer Roderick Broune concluded the roof was riddled with defects and that, had it met basic standards, it would have withstood the violent weather on Saturday, January 30.

"The roof contained latent structural defects, that were due to poor design and/or workmanship during the initial construction ... and if the roof had not contained these structural defects then no loss and damage would have occurred during the storm," AIG said in a letter.