In January 2020, Mr S made a claim for water damage to his house, which occurred when his washing machine overflowed after he was arrested. He said the police wouldn’t let him turn it off and, by the time he was released 2 days later, the house had flooded.
When the insurer’s loss adjuster visited the house 9 days after the flood, there was water damage to carpet, skirtings and wall linings throughout the house. It was noted that repairs would be difficult due to the condition of the house, its pre-existing damage and lack of maintenance.
The insurer accepted the claim in December 2020 and offered Mr S $7,504.77. Mr S rejected the offer in March 2021 and provided a quote from a builder for $40,190.95 to repair the house.
Mr S’s builder told the insurer that the quote was based on the damage he could see. He said he could not provide a breakdown, because he could not say what damage was from the washing machine flood and what damage was not, because he had viewed the damage 14 months after the flood.
The insurer declined to pay Mr S $40,190.95. It said there was considerable pre-existing damage to the house and Mr S had told it there was unrepaired earthquake damage.
Mr S complained the insurer did not properly assess the damage, which “far exceeded the value [the insurer] allowed for”.
The IFSO Scheme found the settlement offer was fair and reasonable and the insurer was not required to make any further payments to Mr S.
Complaint not upheld
There is a difference between a sudden event and pre-existing damage. Insurers will cover a sudden event that meets the policy’s terms and conditions, but they are not obliged to pay for damage that happened before the policy started.
See the full case study.