Water leaks in bathroom areas such as shower recesses have triggered dozens of disputes lodged with the Australian Financial Complaints Authority (AFCA), despite exclusions for such claims in most home and contents policies.

AFCA does not have a breakdown for home insurance complaints by specific causes, but a search of the keyword “shower” for published general insurance determinations since October 1 last year, when it started naming insurers, returned more than 80 results.

In one of the complaints, AFCA agreed with RACT’s decision to decline a claim for a water leak in the bathroom area of an investment property. The insurer said the damage was the result of lack of maintenance, general wear and tear or poor design and workmanship.

While the policy did cover for escape of water, it excluded wear, tear, loss or damage as a result of a gradual process of leaking, dripping, splashing or overflowing over a period of time, according to a copy of the product disclosure statement (PDS) attached to the determination.

In another dispute, a claimant tried to seek compensation from Suncorp for damage to his bathroom floor. But the insurer declined the claim on the basis that the damage was caused by water leaking from a shower, which is not covered under the home insurance policy held by the claimant.

AFCA ruled in favour of Suncorp, citing the specific exclusion in its PDS for damage caused by a leaking shower. The policy covers for escape of liquid from specific items such as baths, sinks, toilets, fixed tanks and refrigerators but leaking showers are excluded.

In a dispute involving QBE, AFCA ruled the insurer had not proven that a leak from a shower area had been caused by wear and tear or gradual deterioration and that the claim should be paid.

The Consumer Action Law Centre says the way exclusions are worded differently by insurers adds to the confusion for policyholders, who are already struggling to understand PDS documents.

“This demonstrates how the current method of disclosure by insurers does not work for consumers, and why core insurance products should provide clear and consistent standard cover,” the centre’s Insurance Policy Officer Tom Abourizk told insuranceNEWS.com.au.

“Considering many home and contents policies will cover leaks or liquid escaping from a bath or a sink, exclusions for water damage caused by a shower will inevitably catch many people off guard.”

AFCA says it handles all complaints, including those caused by water leaks, based on facts, fairness, the terms of the policy, industry practices and the relevant codes of practice.

“Like any dispute, we will do what is fair in all the circumstances,” Lead Ombudsman for General Insurance John Price told insuranceNEWS.com.au.

He says there are a huge variety of disputes that can be classed as “water leaks” from burst pipes to leaking showers to leaking roofs.

“This combined with the different levels of cover with insured events or accidental damage and the large number of storm and rain events, can result in a significant volume of disputes,” he said.

Click here for the Suncorp case, here for RACT case, and here for the QBE case.