Insurer required to partially cover burst flexihose damage
A landlord who claimed for a kitchen renovation after a pipe burst will be partially covered for his losses after the Australian Financial Complaints Authority (AFCA) found that his insurer could not deny the entire claim.
The policyholder lodged the claim after the burst flexihose flooded the property in March last year.
The property’s tenant, who had not been home when the incident occurred, called a plumber to resolve the issue.
The plumber replaced the pipe and tap, during which they disposed of the damaged pipe and did not take any photographs of the damaged area. The claimant was only made aware of the burst pipe after the repairs had been completed.
Following the repairs, the complainant installed a new kitchen to make the property available for rent again. The insured sought for Suncorp to cover the cost of the works, which amounted to $15,400.
The insurer declined the claim, saying the complainant failed to meet the policy requirements to allow the insurer to assess the claimed damage. It notes that the insured had failed to keep the damaged pipe, removed cupboards from the damaged kitchen, and completed the new works to the kitchen.
The insurer’s assessor, who inspected the property in October, attributed the cause of the damage to the burst flexihose as well as “age-related wear and tear”.
AFCA says there had been “partial prejudice” to the insurer due to the works and repairs but accepted that it had ample opportunity to investigate the circumstances of the loss with the plumber, which it did not.
It notes that the immediate works conducted by the plumber warranted “emergency repairs” as per the policy’s definition, and had been completed without the complainant’s knowledge.
“In assessing the claim, the insurer had the opportunity to obtain a more detailed report from the plumber regarding the cause of the burst pipe if it had concern as to causation of the loss,” AFCA said.
“Accordingly, I do not accept that the prejudice in assessing the cause of the loss should be to the extent of the entire claim due to the failure of the tenant or plumber to retain the component from which the escape of liquid occurred.”
But the ruling disputed the complainant’s contention that the flood damaged the entire kitchen and acknowledged that removing the cupboards impacted the insurer’s ability to assess the claim.
“I find it unlikely that the upper kitchen cabinets were damaged by the burst pipe,” AFCA said.
“Given the tenant continued residing at the property after the event, it [is] also unlikely that the kitchen cooktop was damaged by the event.
“The assessment photographs however do indicate 'swollen chipboard kickboards' which ordinarily occur due to water damage.
“This would appear to match the evidence of the plumber that water had completely flooded the property.”
The decision required Suncorp to only cover the costs of works to the kitchen sink cabinet and kickboards, based on the quotation provided by the insured.
Click here for the ruling.