Gardian Insurance Senior Account Manager Jack Weston has helped secure a substantial payout for a local homeowner in Queensland who had bought home and contents insurance without using a broker. 

While talking with a Gardian client that manages a strata account, Mr Weston was alerted to the plight of the homeowner, who lives in South Mackay, after her toilet flexi hose burst on February 8.

In a March 6 assessment, the insurer denied the claim on the basis of a wear and tear or gradual deterioration exclusion. While the flexi hose “did not appear be old,” the assessment said it had "extensive fraying from unknown causes and surface rust spots forming on the stainless-steel outer casing”. 

“That’s when I said to pass my name on to them to see if I can assist,” Mr Weston tells insuranceNEWS.com.au, adding the hose had been replaced in recent years. “I’ve been doing this for 27 years and in my opinion, with direct insurance, 70% of denied claims should be paid.” 

Mr Weston helped the homeowner take the matter to the Australian Financial Complaints Authority (AFCA), and “within 12 hours” the insurer agreed to accept the claim, he says, though the contents payout amount has still not been resolved six months after the event.  

The water damaged carpets and timber flooring, two vanities, wall and floor tiles, doors, joinery, kickboards, TVs, clothes and mattresses. Over five days, as she visited her daughter in Cairns, the escaping liquid entered the insured’s kitchen, dining room, two bedrooms and a walk-in wardrobe.

With the help of Mr Weston, the homeowner has so far received a $48,340 building payout, $15,000 for accommodation, and $740 for electricity. She is still waiting to see a claim for around $70,000 for contents settled, which so far has only yielded two TVs from local suppliers. 

A report from an insurance repair specialist said the escape of liquid was a result of stainless-steel braiding being corroded and stretched, causing a weakness within the hose and allowing the inner tube to burst. 

"The flexi-hose has failed due to the stainless-steel braid fraying and the inner tube bursting, this is attributed to Wear, Tear and Gradual Deterioration,” said the assessment, which also included a note to the insurer’s claims managers, saying that “as of October 13 assessors have been advised to adjust out application and execution for leaks attributed to failed flexi hoses, effective immediately”. 

“As per Escape of Liquid decline process, assessor is not required to notify our customer of the review findings and outcome,” the document said. 

The case comes after the Code Governance Committee (CGC) said it was “concerned and alarmed” when an inquiry found 55% of declined home claims relied on wear and tear exclusions, and when policyholders protested the decisions, close to half were overturned in favour of the consumer.  

The report also said heavy insurer reliance on advice from builders, plumbers, electricians and other tradespeople they appoint raised a question about their “quality and impartiality” and insurers “must get on top of this”.  

An ICA spokesperson told insuranceNEWS.com.au it is reviewing the findings in detail and its members have identified use of wear and tear exclusions in home claims as a priority area for focus.  

In another recent case, AFCA ruled in favour of a policyholder whose wooden floors and kitchen were damaged because of a leak from the dishwasher. The insurer had denied the claim on the basis the policy excluded loss or damage caused by rust, corrosion or gradual deterioration, and gradual leaking, splashing, dripping or overflowing. 

AFCA ruled the policy covered damage by liquid from a dishwasher.  

“There is no evidence to establish rust and corrosion is causative of the damage (and) that a single leak event did not cause the resultant damage,” AFCA said. “There is no compelling evidence to show which part of the actual dishwasher has been leaking and how the condition of this part falls within the policy exclusions.” 

See that ruling here.