A claimant whose items were wrecked by flooding of a sub-floor storage area has won a dispute after their insurer tried to restrict the payout on the basis the contents were in the “open air”.

The Westpac policy limited claims for contents in the open air to $2000, defining open air as “an area at the site not lockable and not fully enclosed by walls and a roof”.

The insurer argued the sub-floor area was in this category because it is surrounded by timber battens which have gaps between them.

It says the battens are not walls, and the gaps enabled water to enter the sub-floor. If the contents had been kept in a fully enclosed area the damage would not have occurred.

But the insured argues the area is lockable and has four walls and a roof, and that the policy doesn’t state that the walls must be continuous or of a particular design.

The Australian Financial Complaints Authority (AFCA) agreed with the customer, saying that where a word or phrase is disputed, AFCA will rely on its “plain and ordinary meaning”.

“The policy does not define wall or ‘fully enclosed’,” AFCA’s ombudsman writes.

“However, I consider a reasonable person would consider these to be walls, given they enclose the sub-floor area and are able to be locked.

“I do not consider the use of the word ‘fully’ means the walls must be completely airtight. If the insurer had intended such a restrictive definition of open air, it could have included it.

“I consider the complainant’s sub-floor area cannot fairly be described as ‘open air’ under the policy. It is therefore not fair in all the circumstances for the insurer to limit its liability to $2000 for the contents damaged.”

AFCA says the insurer must reassess its liability and settle the claim within a reasonable timeframe.

Click here to read the full ruling.