A homeowner who wanted all his kitchen cabinetry replaced after a kettle overboiled has lost a dispute with his insurer. 

The claimant reported water damage to flooring, three kitchen drawers and a microwave recess last May.

IAG offered to repair the drawers and recess, and provide a cash settlement for the flooring.  

But the claimant argued the insurer should replace all kitchen cabinetry, because no material was available that matched the replacement parts to the undamaged ones.

IAG said its policy stated it would “not pay to repair or replace undamaged materials or sections of your building in order to create a uniform effect throughout your home”. The insurer would instead “use or pay for materials which are of a similar kind or quality”.  

The insured said the policy terms were ambiguous and “the word ‘section’ should be interpreted to require the insurer to repair or replace all the kitchen drawers and cabinets as one section”.

But the Australian Financial Complaints Authority says the policy was “clear and straightforward in anticipating and responding to complainants’ circumstances”.  

Its ruling said: “It would not be fair to require the insurer to meet the complainant’s expectations when they exceed the terms and conditions to which both parties agreed when they entered the contract.

“As the parties do not dispute that a perfect match is not available, the insurer’s liability is limited to using or paying for materials that are of a similar kind or quality to replace the damaged parts.”  

The authority notes the insurer made a time-limited offer of $7400 – three times a builder’s quote for fixing the drawers and recess – to resolve the dispute, but the claimant rejected it.  

AFCA requires IAG to make an adjusted settlement of $5403. This does not include flooring costs, because that matter has been privately settled.  

See the ruling here.

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