Insurer declines burglary claim because of open window

The IFSO Scheme recently handled a case where an insurer declined a claim due to homeowners leaving a window open on a security stay during their holiday.

The Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) has some advice for homeowners ahead of the upcoming Christmas holidays.

“Always take care to protect your contents by locking your house and closing windows when you go away on holiday. Insurance policies often contain reasonable care conditions that require you to take care of your insured property,” says Karen Stevens, Insurance & Financial Services Ombudsman.

“However, you can also expect insurers to take a considered approach to each claim, reviewing the specific circumstances,” she says.

The IFSO Scheme, which resolves complaints about insurance and financial services at no cost, recently handled a case where an insurer declined a claim due to homeowners leaving a window open on a security stay during their holiday. However, after a thorough investigation, the IFSO Scheme required the insurer to pay the claim.

In this particular case, Mr and Mrs Singh* returned from their holiday to discover their house had been burgled. Access had been gained through a small window which had been left open on a security stay. The insurer initially rejected their claim, citing a failure to securely lock the house during their absence.

Mr and Mrs Singh complained to the IFSO Scheme. Upon examination, the IFSO Scheme found that the insurer had introduced a policy in 2020, imposing a new condition on the insured to ensure their house was securely locked when “unattended”.

Other insurers do not have a similar condition in their contents insurance policies, making it an unusual requirement.

“While it’s common for travel insurance policies to have an exclusion for claims where items have been left unattended in a public place, it is unusual for a contents policy to include a condition or exclusion like this. Other insurers will also usually cover claims where a window has been unintentionally left unsecured,” Stevens says.

“If you have been reckless, grossly careless or grossly negligent with your property, an insurer may rely on your failure to meet a reasonable care condition to decline your claim, however, this was not the case with the Singhs,” she says.

Because the new condition in their policy was unusual and required Mr and Mrs Singh to take steps they were not previously required to take, the insurer should have made them aware of this.

“The law says that if a policy includes “onerous or unusual” conditions, insurers are required to bring them to their customers’ attention. However, in this case, there was no evidence that they had specifically notified Mr and Mrs Singh about this unique condition,” says Stevens.

The IFSO Scheme said the insurer was unable to rely on a failure to meet this condition to decline the claim, and the complaint was upheld in the Singh’s favour.

“While the ideal situation is where an insured has taken all steps to prevent a burglary, homeowners shouldn’t be disadvantaged by an unusual or unfamiliar condition in their policy,” says Stevens, “particularly where it is out of step with the rest of the industry”.

“We expect insurers to clearly communicate policy changes to their customers, so they know exactly what is expected of them, and what they have to do to ensure they will be covered under the policy,” she says.

Stevens has a few tips for those heading away for the holidays:

“Check your policy for any limitations on your cover – for example you won’t have cover if something is stolen by a house sitter or invited guest. Make sure all doors and windows are locked and any alarm is on. If you’re going away for more than 60 days, tell your insurer. Check all taps are off securely – gradual damage caused by dripping taps is not covered. If you’re on the road this summer, don’t leave any items visible in your car. Don’t let teens drive with friends in the car if they’re on a learner or restricted driver’s licence. If you’re travelling overseas, make sure you get travel insurance. Also, check that you’re up to date with your premiums, so none of your insurance lapses while you’re away.”

Stevens would like to remind consumers to reach out to the IFSO Scheme if they believe an insurance claim has been wrongly declined. “We offer a free, fair, and independent service to consider consumer complaints about insurance and financial services,” she says.

*Names have been changed

Media contact

Sarah Smythe
IFSO Scheme Communications Manager
sarah@ifso.nz
021 292 4036