A man who stepped out of his shower and fell through the bathroom floor is one of a growing number of people caught out by insurers' approach to gradual damage.
By Susan Edmunds of RNZ
The man discovered significant water damage under the tiles and floor of his bathroom and made a claim to his insurance company.
While the insurer accepted there had been a leak, it said the damage had not happened suddenly.
Because the leak had been there a while, the claim was capped at the amount of the policy's gradual damage benefit.
Most policies cap gradual damage at between $2000 and $5000 and only allow a claim if leaking has occurred from an internal water pipe or system.
The man argued the MDF in the floor would have broken down quickly when water got in so the damage must have happened suddenly.
He complained to the Insurance and Financial Services Ombudsman, which said to be covered in the main part of the policy, the damage had to happen instantly or at all once.
The evidence showed a hidden leak and mould that would have taken time to develop. The ombudsman scheme said the insurer had correctly applied its policy.
In another case, a couple made a claim because they discovered cracks in the walls of their house, fallen tiles and a gap between a benchtop and a wall after a storm.
The insurer turned down their claim and said it wasn't a sudden event. It also cancelled their policy because they had not disclosed pre-existing issues with the property, which were in a builder's report.
They complained to the ombudsman too. The scheme found reports that the damage was from long-term ground movement and caused by wear and tear, faulty workmanship, earth movement or was pre-existing, rather than occurring suddenly.
It said the storm might have highlighted the issues but did not cause them.
This financial year, 6% of disputes accepted for investigation by the Insurance and Financial Services Ombudsman have related to gradual damage, compared to 5% last year.
Ombudsman Karen Stevens said it was becoming a more common problem and was among the top five issues for the past two years.
"The key issue is the gap between what people expect and what policies cover. Many people expect that, if they suddenly discover damage in their house, their insurer will pay to fix it. However, insurance only covers sudden damage, not damage that occurs over time and may have been discovered suddenly. It is the cause of the damage, rather than its discovery, that has to be sudden," she said.
"Signs like mould or a small ongoing leak can point to gradual damage. It's important to fix leaks quickly, as leaving them unresolved can lead to further damage that probably won't be covered.
"Damage is usually gradual with hidden water damage. Things like internal guttering can make any problems harder to spot and can cause serious damage before you know there's a problem.
"If you're claiming for damage after a weather event, you need to show a clear link between the event and the damage. Insurance won't cover issues that were already there before the event happened. Long-term issues like foundation movement are usually not covered.
"If you're disputing a claim decision to do with gradual damage, we recommend you engage an expert to provide evidence on what caused the damage. Expert reports can be critical in resolving disputes, especially where there's a question about what caused the damage and when it happened."
She said insurers would usually regard any damage that happened outside a 72-hour period as gradual.
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