A waterfront sports club has lost a dispute over pontoon damage attributed to a cyclone after its insurer relied on an “action of the sea” exclusion.

QBE partially accepted a building, contents and business interruption claim following the December 13 2023 cyclone, but it declined to include the pontoons and piles.

The policy stated loss caused by the action of the sea or high water was not covered, unless arising from an earthquake or seismological disturbance.

The club argued the cyclone triggered a series of events leading to the pontoon and pile damage, and there was no intervening force from an independent source, so the storm system was the proximate cause of the loss.

It cited a NSW court case in which a fire on a power pole that triggered an electrical surge was found to be the cause of damage to an engineering company’s laser.

If the commercial intention was to exclude all loss or damage causally connected to an action of the sea, the insurer could have drafted the policy to reflect that, the sports club maintained.

QBE said the damage was caused by waves, which are an action of the sea; the cyclone was not the proximate cause, and no evidence showed high wind damaged the pontoon and piles.

“The cyclone could not have caused this loss on its own and the loss would not have occurred without the action of the sea,” it said.

The Australian Financial Complaints Authority says the exclusion could have been better worded, but it is unconvinced by the claimant’s interpretation.

The laser damage case contained “useful and erudite commentary on proximate cause”, but it was not concerned with relevant insurance products or exclusion wordings.

“The insurer is entitled to rely on the action of the sea exclusion to deny the disputed damage claim,” it found.

The decision is available here.