GROUP: Insurance - Fire & General
SERVICE: House
Complaint No : 130484
YEAR: 2015
Casebook Index: Damage - House, Gradual damage, Scope of cover
Summary:
Ms G’s complaint was not upheld, because the damage happened prior to
the policy inception date and was excluded by the policy.
In April 2014, Ms G arranged house insurance with an insurer.
In August 2014, Ms G discovered damage to the floorboards caused by a
leaking hot water cylinder at the house. Ms G made a claim to the insurer for
the damage.
A loss adjuster confirmed the hot water cylinder had been leaking for 6 - 12
months. Therefore, the insurer declined the claim on the basis that the
damage pre-dated the policy inception date. The insurer offered to pay Ms G
50% of the repair cost, less the policy excess, on a “without prejudice” basis.
Ms G rejected the offer, maintaining the claim should be covered in full by the
policy.
The case manager’s assessment
The issue concerned the application of a hidden gradual damage benefit in
the policy, which said the insurer would pay up to $3,000 for any hidden
gradual damage that happened and which the insured discovered during the
period of insurance.
Ms G believed this applied, because there was damage that happened and
she discovered the damage during the period of insurance.
The case manager believed the correct interpretation of the hidden gradual
damage benefit was that both the damage needed to have happened and
also have been discovered during the period of insurance. Given the damage
happened before the period of insurance, the gradual damage benefit did not
apply and the case manager believed the insurer’s “without prejudice” offer
was fair and reasonable in all the circumstances.
Complaint not upheld