The Australian Financial Complaints Authority (AFCA) has ordered Chubb to accept liability for a water damage claim after the insurer declined cover, saying the likely cause of the damage pre-dated the policy’s inception. 

The complainants lodged the claim, under their business policy, after their company’s offices were impacted by water entry in January 2021. 

Chubb did not dispute that the business had been damaged but declined the claim, saying it stemmed from ongoing water ingress issues, which had been well-known to the claimants prior to the policy’s inception in September 2020. 

The insurer says the policyholders failed to adequately address the issues, which had been the cause of a previous claim that was accepted and covered. It also said there had been no “event trigger” for the disputed loss. 

Despite the claim denial, Chubb agreed to contribute to the cost of repairs, offering $25,998 on a good will basis. The claimants disputed the insurer’s decision and set out additional costs totalling $30,031.

AFCA was not persuaded by Chubb’s arguments that the claim was not coverable under the policy, saying that the insurer did not point to “an exclusion, condition or legal principle to support its position”.

It notes that the insured completed works to protect their property following the previous claim and established a valid loss under the policy’s terms. 

“The policy covers this damage as it occurred during the policy period and was accidental,” AFCA said.

“Even if I accept the proximate cause of this damage preceded the policy period, this does not mean the complainants have not established a claim.

“This is because the insuring provision does not require the cause to have occurred during the period of insurance, just the damage.”

AFCA says it was fair for the insurer to assess and accept liability for items covered by the policy, and not already subject to its goodwill settlement offer. 

Some of the additional costs sought by the insured were for items they said had been damaged by the insurer’s contractors. 

But AFCA did not require Chubb to cover these items, saying there had been “minimal information” to show that contractors damaged the items and that the policy did not cover damaged contents or stock, which these items likely fell under. 

Click here for the ruling.