An insurer has been told to fully refit a claimant’s kitchen floor because its offer to replace only damaged tiles would not restore the woman’s home to its previous condition.

Blue Zebra accepted an “escape of liquid” claim and offered to fit replacement tiles of the same size and a similar colour and material because the original ones were no longer available. Alternatively, it would cash settle for $1817.

The claimant argued the replacement tiles lacked the distinct pattern of the remaining original ones, meaning she would have had to pay to replace the undamaged ones too for a matching look.

She insisted the insurer cover the cost of replacing all flooring in both her kitchen and family room.

In a dispute ruling, the Australian Financial Complaints Authority said: “Being the same size and of a similar colour and material to the existing tiles does not show the replacement tiles are a reasonable match (or even an equivalent match) ... the existing tiles have a distinct pattern on them, and the replacement tiles do not.

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“The proposed settlement would leave the insured well short of [restoration to the previous condition], given the proposed ‘repair’ would leave them with a property that has an impairment in value compared to its pre-existing condition, because of the mismatched flooring.”

Because the insurer could not find “reasonably matching tiles”, it must replace the kitchen floor to comply with its policy’s coverage.

The authority notes the policy required 40% of the floor to be damaged for the “undamaged material” benefit to kick in, and that threshold had not been met.

But it said: “The strict application of the disputed clause can lead to outcomes that are substantively contrary to the policy purpose and the reasonable expectations of a consumer.”

However, only the kitchen floor needs replacing to achieve a visually consistent look, it says, and not other “open plan” areas that feature the same tiles. Blue Zebra should either arrange the work using the complainant’s preferred tile or offer a cash settlement.

See the ruling here.