The industry ombudsman has ordered Chubb to increase its payout to a dental clinic and work with experts to determine the extent of damage caused by a burst flexi-hose.  

The clinic claimed for damaged contents and business interruption after a kitchen sink pipe caused “ankle-length” flooding in December 2023.

It provided a document prepared by the clinic’s former owner – the claimant’s landlord – stating all dental equipment and furniture, plus flooring and walls, needed “immediate replacing”.  

The claimant also cited a report from another dentist who said the water damage had “devastating effects” because most of the equipment had lost the precision required to do its job.

The sum sought by the claimant exceeded its policy’s $400,000 limit for contents damage.

Chubb argued the damage was limited because most items were kept well above the height of the water.  

Its dental equipment specialist concluded most items were operational, except for a few that required additional checks.  

In May last year, the insurer made a progress payment of $25,000 and suggested its engineer inspect the damage, but the claimant rejected this. The clinic said enough time had passed for Chubb to decide on the claim.  

In its dispute ruling, the Australian Financial Complaints Authority says neither party has provided convincing evidence on the extent of the damage and both sides have contributed to a “lack of readiness” that prolonged the claim.  

It notes the business initially denied Chubb’s experts access to the clinic, while Chubb failed to follow up on checks suggested by the equipment specialist and could have made a claim decision in February last year.  

AFCA has told Chubb to increase its settlement to “the amount above its $25,000 progress payment that it currently accepts is covered”, plus interest, and to find two engineers that can assess the equipment damage. The claimant can then choose one to carry out the checks.  

The authority says more information is required before Chubb can evaluate the business interruption claim. The complainant should hire a forensic accountant to work with the insurer’s BI expert. Chubb has been asked to provide $25,000 to cover the accountant’s fees.  

See the ruling here.