SERVICE: Contents
OUTCOME: Settled
Issues: Prima facie claim; Onus/Burden of Proof
Summary: Mr and Mrs T’s* complaint was settled, because it was more likely than not that the damage had occurred during the period of cover as a result of impact by a vehicle. Therefore, the impact damage was within the scope of cover provided by the policy.
Mr and Mrs T held insurance on contents of their house.
In November 2019, Mr and Mrs T arranged for some of their household contents to be moved into storage, while they lived overseas. An endorsement was added to the policy, which limited the cover for contents in storage to various defined events, including impact by vehicle, and applied until November 2020.
In April 2023, having been away longer than intended, Mr and Mrs T arranged for the contents to be taken out of storage. Mr and Mrs T discovered that the contents had suffered impact and water damage.
Mr and Mrs T made a claim to the for the damage. Mr and Mrs T also made a claim to a second insurer, which provided them with transit cover for the contents.
The insurer relied on the endorsement to say that the contents were only covered while in storage until November 2020. Therefore, Mr and Mrs T could not show that the damage occurred prior to this date or that it resulted from one of the events listed on the endorsement. However, the insurer made a payment of $2,500 in recognition of delays in handling the claim.
Mr and Mrs T made a complaint, saying the second insurer had accepted the claim which was most likely a result of an incident during the contents being in transit to the storage facility, given the shipping container had been pierced and taped over. Mr and Mrs T said that the second insurer paid 50% of the claim, so the insurer should pay the other 50%.
The case manager’s assessment
When an insured makes a claim under an insurance policy, the law says that it is up to them to prove that they have suffered a loss, which is covered by the policy.[1] Here, the endorsement stated that there was cover for “sudden and unforeseen physical loss or damage”. This meant Mr and Mrs T had to show that the damage was “sudden”.
The policy did not define “sudden”. However, this is a legally defined term which means “‘abrupt’, ‘all at once’, ‘instantaneous’”.[2] Therefore, in order for the damage to be covered by the policy, it had to have occurred “instantaneous[ly]”.
The water damage was not “‘abrupt’, ‘all at once’, [or] ‘instantaneous’”, but occurred over a period of time. Therefore, the insurer was able the rely on the endorsement and also the standard terms of the policy to decline to include the water damaged items in the claim.
This was standard in the industry, and it was the same basis on which the second insurer declined to cover the water damaged items. In relation to the impact damage, the policy had a double insurance provision, meaning that the insurer could decline to cover damage which should be covered by the second insurer. However, the double insurance provision would not apply to items for which the second insurer had applied depreciation. Instead, the insurer would be required to top-up the second insurer’s settlement, to the full replacement value of the items.
The case manager believed that the evidence provided showed it was more likely than not that the impact damage had occurred during transit, or as a result of impact with a vehicle in the period that the endorsement applied.
As a result, the insurer would be required to top-up the second insurer’s claim settlement. Following discussions with the case manager, the insurer offered to settle the claim on the basis of a payment of $9,860, less excess of $250, for a total payment of $9,610. Mr and Mrs T agreed to accept this amount in full and final settlement of the claim.
*Names have been changed
Complaint No: 00230610
[1] This is known as a prima facie claim.
[2] Lumbercorp (BOP) Limited v GIO Insurance Limited (2000) 11 ANZ Insurance Cases 61-475 (HC), Justice Wild.