House insurance only covers sudden damage. Read this guide to find out why gradual damage is not covered, what gradual damage is and what you can do to prevent it.
House insurance provides cover for sudden and accidental damage or loss.
Gradual damage is damage that has developed over time - it is not sudden. House insurance generally excludes claims for gradual damage.
The IFSO Scheme receives many complaints from people who have had property damage claims declined because of a gradual damage exclusion.
You might expect that, if you discover damage in your house, your insurer will pay to fix it. However, only damage that is caused by a sudden event is covered by house insurance.
Keeping your house maintained and in good repair can help protect it from some wear and tear. However, some wear and tear is inevitable and this damage is unlikely to be covered by your insurance policy.
Mr and Mrs Forrest’s* laundry leak
Mr and Mrs Forrest made a claim after they discovered damage to their laundry walls from a leak in their dryer. A professional report confirmed the dryer was leaking water from the back panel due to a blocked sump hole within the dryer. The insurer declined the claim because it was not sudden and the gradual damage exclusion applied. Mr and Mrs Forrest felt the gradual damage extension should apply. However, their circumstances were outside the criteria of the extension, because the leak was not from a hidden water or waste disposal pipe.
Paula’s* damaged carpet
Paula made a claim after a hole was discovered in the floor of her rental property. The carpet and particleboard floor had been damaged from an ongoing leak in the ranch slider door. A builder confirmed the damage had been caused by the leak over many months. Paula said the damage was hidden and her tenant had not notified her of the issue – she believed she had shown a valid claim, because she discovered the damage suddenly. However, the cause of the damage was gradual, not sudden. The insurer was able to rely on the gradual damage exclusion to decline the claim.
*Names have been changed
Sudden damage occurs all at once or instantaneously at the time of the accident or unexpected event. Examples of sudden damage include:
Gradual damage occurs over time. Examples of gradual damage include:
Gradual damage policy exclusions may exclude damage caused by:
Sometimes, gradual damage is not obvious for a long period of time. This could mean the damage is discovered “suddenly”. For example, the damage may only be discovered when a hole appears in rotten flooring in the bathroom.
However, it is the cause of the damage that is relevant, not how or when it is discovered. For bathroom flooring to rot and cause a hole, it will have been wet over a long period of time. The cause of the damage is gradual and is not likely to be covered by the policy.
Your knowledge about the damage is not relevant to whether it is gradual. Even if you could not have known about the damage because it was hidden, if it is gradual damage, it will still be excluded by the policy.
Different insurance policies will contain different wordings. It is important you understand your policy wording and the exclusions that apply to you.
When you make a claim, you need to show the damage was sudden. This means you will need to show the damage occurred from a sudden event.
If the insurer relies on a gradual damage exclusion, it needs to show the damage developed over time and the wording of the exclusion in your policy applies.
Photographs, together with reports and written opinions from qualified professionals can assist you and the insurer to establish how the damage happened and whether it was sudden or gradual.
Some factors that could be relevant to a property damage claim assessment include:
If you disagree with an insurer’s assessment of the damage to your property, you can obtain your own professional reports or opinions to support your claim, at your own cost.
Some house insurance policies include a policy extension which provides cover for limited types of gradual damage. This extension will generally only apply to hidden damage caused by a leaking internal water or waste disposal pipe. The extension is usually capped at about $2,000 – 3,000.
Check your policy wording for what is covered and the total amount available under the extension.
You are able to request a review of the claim decision through your insurer’s internal complaints process. If you are unhappy with the insurer’s response, you can ask the IFSO Scheme to investigate your complaint, for free.
Read your policy
Read your insurance policy and make sure you understand the gradual damage exclusions that apply.
Look after your house
Keep your property maintained and in good repair. Keep records of maintenance, repairs and any improvements to show what work has been done.
Fix problems quickly
If you become aware of a problem (for example, a leak), take immediate steps to prevent further damage and notify your insurer.