The Australian Financial Complaints Authority (AFCA) says Suncorp cannot deny a burst flexihose claim due to rust on the hose’s exterior. 

The insured lodged a claim after the hose under a bathroom sink burst suddenly, causing damage. 

The policy covers escape of liquid from a water supply pipe, but Suncorp applied an exclusion for “loss or damage caused by wear, tear and gradual deterioration, rust, fading, rising damp, mould, mildew, corrosion, rot”. 

In its response to AFCA, the insurer also says flexible hoses should be checked on a regular basis to identify issues like “corrosion or rust spots on the braided section of the pipe, bulging areas and fraying and kinking of the pipe”. 

The insurer engaged an expert who found that the hose showed evidence of rust and that this caused it to fail and burst. 

But AFCA says the expert’s report is based on opinion and is not supported by evidence. It says the insurer has not explained how the rust caused the failure. 

“The panel accepts the images provided by the insurer show the flexihose had signs of rust or corrosion on the outer braided layer,” AFCA’s ruling says. 

“However, the panel is not satisfied the insurer has provided any information on how this has affected the internal rubber tubing causing it to burst. 

“The panel accepts rust or corrosion is a gradual process, however, the information provided by the insurer is not compelling in establishing that the rust or corrosion sufficiently weakened the hose allowing it to burst.  

“This is because the panel is not persuaded the mere presence of rust on the outer braided layer is enough to establish it is the proximate cause of the loss.” 

AFCA says the onus is on the insurer to establish the exclusion, and it would need to provide “persuasive information detailing how the rust or corrosion set the chain of events in motion”. 

“In other words, the insurer would need to show if not for the rust the burst would not have occurred, to which the panel is not satisfied it has done.  

“The panel notes that flexible hoses are known to burst or fail for multiple reasons regardless of the presence of rust.  

“Given this and the lack of information provided by the insurer to show that without the rust or corrosion the event would not have occurred, the panel is not satisfied the insurer has established the application of the exclusion it seeks to rely on.” 

Click here to see the ruling in full.

See Analysis.