Chubb must pay to replace cables on two lifts in an apartment block after an owners’ corporation successfully argued the damage related to a previously accepted vandalism claim. 

The owners lodged a claim in 2018 after several hydrants were deliberately opened, causing water damage to the lifts.  

They obtained a scope of work from the lift’s manufacturers and maintenance consultants, and this included replacing the “hoist ropes”.  

But Chubb’s assessor did not approve of replacing the cables. The reasoning for this was not provided to the Australian Financial Complaints Authority hearing that followed.  

A revised scope of work was agreed, and the consultants placed the cables on a “watchlist”, expecting further water deterioration.  

In 2019, the consultants warned the owners about the risk of further damage due to moisture in the lift pit and insisted on restoring the lifts to their original state. The following year, work was completed to replace the cables, which the insureds claimed for.  

Chubb argued that for its policy to respond, “direct physical damage” must occur from “any sudden and accidental cause” to the insured property.  

It said it was not required to cover the cables because the damage was caused by inadequate lubrication and extended use.  

Chubb referred to findings by its appointed consultant that there was “no evidence to suggest water actually contacted or impacted the main hoist ropes”. 

It said there had not been “any evidence to suggest significant volumes of water actually entered either lift shaft ... during the 2018 vandalism flood event”.

The Chubb consultant noted lift maintenance data showed cable degradation was observed only after the main hoist ropes were lubricated in January 2019, and suggested this was the only record of lubrication work since the lifts were installed in 2015.  

In its dispute decision, AFCA takes issue with the expert’s dismissal of moisture in the lifts, saying Chubb’s assessor had noted water exposure and the insurer had already provided cover for other water-related damage to the lifts.  

It says the Chubb consultant took “a cynical view” of the maintenance records, and notes “additional instances of rope lubrication” were recorded.  

AFCA doubts the damage was caused by overuse. It says the Chubb expert’s conclusion lacked “any technical or scientific testing of the hoist ropes to show their condition is consistent with overuse over a short period of time” and instead relied on comments found on social media and accommodation websites.  

“I am not satisfied the insurer has been able to show it is more likely than not that the premature deterioration of the hoist ropes is due to one or more of the exclusions provided in the policy,” an AFCA ombudsman said.  

“Rather, without persuasive information to the contrary, I am satisfied it is fair to accept the reason for this premature deterioration of the hoist ropes is most likely the significant water event that occurred in 2018, and which has been accepted as an insurable event under the policy.”  

See the ruling here.