An insurer will have to cover property repairs for water damage after the ombudsman ruled the event was claimable under a home and contents accidental loss policy.

The complainant, who was represented by a broker, lodged a claim for damage to her property in June 2022 that she said was related either to a leaking kitchen pipe two years earlier or defective repairs following an “escape of liquid” claim in 2015. 

The kitchen sink was frequently used and would have generated a considerable amount of leakage into “highly reactive soil”, she said.

IAG’s Insurance Australia Limited argued the damage was caused by an increase in rainfall, lack of drainage and inherent defects in the sewer and storm drainage system, with problems occurring over an extended period and not related to an insurable event.

An engineer’s report obtained by the insurer highlighted an increase in rainfall since 2020 as a dominant factor contributing to building movement, along with the lack of drainage.

The complainant said the 2022 engineer’s report mistakenly referred to flooring consisting of timber floor bearers and joists, and it was also incorrect in referring to ineffective drainage allowing water seepage under the sub-floor. 

The Australian Financial Complaints Authority’s decision draws on reports obtained by the insurer from a different engineer and a plumber in 2020. Those reports indicated the foundations were not timber floor bearers and joists, and the engineer’s report said the complainant noticed cracking 12 to 18 months before May 2020.

“On balance, the blocked kitchen sewer line was likely a major causal factor of the observed damage claimed in 2020, together with the previous 2015 claim,” AFCA says. “There is no persuasive evidence that the damage was expected or intended. Rather, it was accidental.”

The authority says it is not persuaded that rainfall and seasonal movements were the proximate cause of the damage reported in 2022, and it is satisfied it was caused by a leak from a fixed pipe from either the 2020 or 2015 events.

“The panel is not satisfied that the insurer has established that any of the observed damage is due to any other factors.”

The decision is available here.