A property owner who repaired and renovated her home before lodging a claim will not be covered after a dispute ruling found the works affected the insurer's ability to assess the situation.

The complainant discovered water damage to the property’s bathroom, sub-floor, kitchen and laundry in October 2021, shortly after tenants moved out, and arranged for remediation work to be completed. 

She did not contact Suncorp before starting repairs, saying she assumed the insurer was not operating and wouldn’t have been able to complete the works due to ongoing lockdown restrictions in Victoria. 

The landlord lodged a claim on January 14 last year for the insurer to cover the renovation and repair costs of $38,300, under the claimable event of “escape of liquid”, after an appointed builder determined the damage to be caused by a pipe leak in the bathroom and broken weld in the kitchen.

Suncorp says the complainant’s decision to engage in works prevented it from assessing the claim’s validity as it could not determine the extent or cause of the damage. 

The insurer highlights that the policy’s Product Disclosure Statement (PDS) declares it will not cover costs "if you repair or renovate a damaged area of the property before we can inspect it and find the cause”. 

Suncorp notes that its assessor who inspected the claim could not attribute the cause of the damage because of the works and says various items included in the renovation were upgrades. 

The assessor’s report observed photographs from the leasing agent, which it says showed deterioration on the shower base and laundry tiles, as well as issues with the kitchen sink that could have resulted in the damage.

The Australian Financial Complaints Authority (AFCA) says Suncorp was entitled to decline the claim after determining the insured breached the policy’s terms by conducting the repairs without the insurer’s consent.

“On the available information, the insurer has not been able to investigate the cause of the damage or meaningfully engage with the builder’s report because the damage has been repaired,” AFCA said.

“This means it has not had an opportunity to consider whether the damage is covered under the policy.

“In any event, the complainant’s policy does not cover costs if she repairs or renovates a damaged area of the property before the insurer can inspect it and find the cause.”

The claimant argues that the repairs were necessary to ensure the home was safe and stable while she lived there. She notes that she was “under considerable stress and pressure” at the time due to poor mental health and financial strains from the pandemic.

AFCA acknowledged the complainant’s difficult circumstances but says the works were not for urgent health or safety reasons and were not coverable under the policy. 

“I sympathise with the complainant’s situation at the time she authorised the repairs,” AFCA said. 

“However, the policy deals in detail with the circumstances in which ‘escape of liquid’ will and will not be covered.

“In the circumstances, it would not be fair to compel the insurer to pay the claim notwithstanding the difficult circumstances the complainant found herself in at the relevant time.”

Click here for the ruling.