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Insurer told to pay landlord's claim for meth contamination

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The Australian Financial Complaints Authority (AFCA) has ruled Suncorp has no grounds to decline a claim for damage to a property caused by methamphetamine contamination.

Suncorp had rejected the claim made by the complainant, arguing the contamination falls within its landlord policy exclusions for “biological, chemical and other pollutants or contaminants”.

The insurer says the general exclusions are intended to cover any damage caused by chemicals or contaminants and should be read in terms of individual clauses. It says methamphetamine – a drug more commonly known as ice – is a chemical as well as a contaminant.

But AFCA disagreed, saying "it is not appropriate to give an exclusion a meaning other than its plain meaning”.

It says the general exclusions do not apply to the “passive act” of a tenant leading to contamination because of the use of an illegal substance.

“The proximate cause of the damage in this instance was not any threatened biological or chemical contaminant but the result of a tenant using methamphetamines,” AFCA says.

A portion of the policy exclusion refers to “actual or threatened events”, but in this dispute “no actual or threatened biological, chemical, or contaminant attack occurred to cause the contamination”.

Finding Suncorp liable to meet the complainant’s claim for methamphetamine contamination, the AFCA ombudsman accepts that the contamination was loss or damage that occurred without the complainant’s intent.

The complainant initially made a claim in May last year for malicious damage to the tenanted property, but withdrew the claim as the repair bill was covered by the tenant’s bond.

But two months later the complainant notified Suncorp of contamination caused by the use of methamphetamine, rending the property unliveable. The insurer declined the claim.

Suncorp was also ordered to appoint an independent assessor or builder to prepare a report on the damage within 14 days of the complainant accepting the ruling.