The owner of a 2016 Nissan X-Trail will be compensated for water damage to her car after winning a claims dispute.

The complainant lodged a claim around October 5 last year, under her comprehensive motor vehicle policy, after water leaked through the vehicle’s sunroof, causing internal stains and overloading its electronic system.

The claimant said water entered the vehicle after a storm event in the months prior and reported the vehicle as a total loss because it had been unsafe to drive.

Hollard denied the claim, saying the water intrusion occurred over time rather than as a result of an insured event. It said the vehicle’s sunroof drains were faulty because of prolonged wear and tear and could not effectively funnel water.

An insurer-appointed expert, referred to as CV, confirmed the internal damage in the vehicle. CV reported a “musty smell” in the car and said the deterioration was caused by water ingress.

The inspector found that all four of the sunroof’s drain tubes were performing slowly due to partial blockages.

“During heavy downpour simulation water test found water to rise in sunroof cassette and not draining fast enough”, the inspector reported.

The insurer’s internal assessor, SG, reviewed the inspector’s report and said the pipes should be cleaned annually to avoid such blockage. SG deemed “wear and tear” to be the cause of the damage.

A second internal assessor explained that the sunroof cassette acts similar to a gutter by directing water toward the drain pipes.

The assessor noted that the drain pipes attract dust, debris, dirt and algae and must be maintained to avoid damage.

The Australian Financial Complaints Authority (AFCA) noted that both experts did not inspect the vehicle but rather interpreted their findings from the inspector’s report.

The ruling agreed with the experts’ assessments that the problem was caused by the vehicle’s inability to cope with the water funnelling through the drain pipes. However, AFCA disputed that the claimant’s policy did not cover the damage.

AFCA said the policy covered accidental damage caused by natural events, pointing to the confirmed heavy rainfall that occurred before the vehicle malfunctioned.

The woman said in early September last year that her local area recorded 50.8mm of rain over two days.

AFCA said there was no indication that the vehicle sustained any damage before the significant rainfall unless the insurer could prove otherwise.

The ruling said it was not satisfied that the five-year-old vehicle would have considerable deterioration to cause the drain pipes to be ineffective to handle the rainfall. It said the damage could have occurred for several reasons, including the storm.

The decision also doubted whether the applied policy exclusion was permissible in this scenario. The policy said it would not cover claims “where a component fails to perform to its intended design specification”.

AFCA said Hollard failed to address how the blockage started and instead relied on the inspector’s speculation.

“I acknowledge there may have been a drain blockage, but the onus is on the insurer to show how and why it happened. It is not sufficient for it to simply speculate,” AFCA said.

It noted Hollard did not show how the policyholder’s vehicle did not have the “intended design specification”, saying it was “essential” that the insurer provided information for what level of water the drains were designed to cope with for the exclusion to be applicable.

AFCA determined that it was “too simplistic” for the insurer to refer to the inspector’s tests and determine that the vehicle was not meeting the design specifications.

Hollard was required to pay the claim, and the balance of the complainant’s hire vehicle expenses.

The ruling dismissed the complainant’s appeal for compensation over how the claim was handled, saying that the insurer could have managed some things better but that it was dealt with promptly and fairly.

Click here for the full ruling.