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Determination
Case number | 979371 |
Financial firm | Auto & General Services Pty Ltd |
Case number: 979371 21 May 2024
The complainant holds a home insurance policy with the financial firm (insurer). On 17 October 2022 the complainant lodged a claim for flood damage to his property.
The insurer declined the claim on the basis the flood damage occurred within 72 hours after the complainant opted for the ‘flood’ option. It says there is no cover within this time.
The complainant disputes this decision and seeks cover for his damaged home.
No. The available information, on balance, does not indicates the house was flooded within 72 hours of the complainant taking out the flood option on his policy. Flood damage, caused within 72 hours of opting into the flood damage option, is excluded. The insurer has not, on balance, shown that the house was flooded before 8.07am on 15 October 2022. On balance it has shown that the grounds would have been flooded prior to that date and time
The available information indicates on balance the flood damage, to the grounds, occurred within 72 hours from taking the flood option. It does not shown that the inundation to the house occurred, within 72 hours. It is fair that this determination is partially in favour of the complainant.
This determination is partially in favour of the complainant.
The insurer is entitled to decline the claim partially and is to settle the claim as set out in 2 hereof.
The complainant carries the initial onus to show a loss is covered by the terms and conditions of the policy. This is known as establishing a valid claim.
Once a valid claim has been established, the insurer is liable for the loss unless it shows an exclusion or limiting condition applies. The insurer has the onus of proving, on the balance of probabilities, that the exclusion or condition applies.
The complainant’s policy covers loss or damage caused by specific insured events listed in the policy. On 12 October 2022, the complainant opted to purchase additional coverage for ‘flood,’ an optional feature available under the policy. Cover is subject to policy terms and conditions.
There is no dispute the property was damaged by a flood. Therefore, the insurer is now required to show an exclusion or condition applies to decline the claim.
The complainant held a home and contents policy with the insurer which excluded flood cover. At 8.07am on 12 October 2022 he included flood cover in the policy. At that time, he was made aware there was a 72-hour exclusion on flood cover. It is not disputed by the parties that flood cover would have only been available from 8.07am on 15 October 2022.
The issue is whether the house suffered loss and damage by flood, before 8.07am on 15 October 2022.
Relevantly, the insurer relies on an exclusion for ‘uninsured period’, which states there is no cover for any loss or damage within 72 hours of when cover is purchased, when the loss or damage is caused by bushfire, grassfire, flood or a storm.
The report from the insurer’s hydrologist ‘RE’ says:
RE attached the property-specific Flood Information Report (North Central CMA,
2023).
‘RE’ says the report:
The flood depth at the property relates to a level of approximately 115.9mAHD which generally accords with the gauge levels.
RE concluded by saying the insured property was damaged by flooding with a depth of 0.4m over ground and this occurred from 14 October to 16 October 2022.
The complaint’s son visited the property at around lunchtime on Friday 14 October 2022 and said that it was fine with no damage. He was unable to access the property on the Saturday 15 October 2022, due to road closures. He was able to access the property on Monday 17 October 2022 when there was about 2 feet of water throughout the entire house.
The PDS states:
Flood
We will pay for loss or damage at your insured address caused by flood.
Flood is defined as the covering of normally dry land by water that has escaped or been released from the normal confines of:
• a lake, river, creek, or other natural watercourse (whether or not any of them have been altered or modified)
• a reservoir, canal or dam.
Uninsured period (first 72 hours of this policy)
You are not covered for any loss, damage, or any legal liability you incur within 72 hours of when you purchase your insurance cover because of:
• bushfire or grassfire
• a flood
• a storm.
Loss and damage is set out in the definitions as:
Physical loss or physical damage.
I am satisfied, on the information provided, on balance that the insurer would be liable for any flood loss or damage, which occurred at or after 8.07am on 15 October 2022.
RE’s report contained the uncompleted section:
I Start of Flood/Inundation
I Peak of Flood/Inundation
I am somewhat surprised this information, in the report was not included, given the fact that the time the property was flooded is crucial to this matter.
The Flood Information Report (North Central CMA,2023) provides information in relation to the likely inundation of the property floor. The surveyed floor level is 115.8mAHD and flood may start affecting the property at 115.20mAHD.
Nothing has been provided by the insurer to show the approximate times when these levels were likely to have been reached.
When the complainant raised the lack of information contained in this report in relation to inundation the insurer responded that RE’s report showed the property was affected by flood from 14 October 2022 to 16 October 2022.
The Flood Information Report (North Central CMA,2023) contains a map which shows the property is on the edge of the flood area.
The insurer has not disputed that the complainant’s son visited the property on 14 October 2022 and there was no damage.
RE’s report say the river at the gauge remained elevated above 115.mAHD from approximately midday on 14 October until the early hours of the morning of 16 October.
The information that the property may experience when level reaches 115.2mAHD but this does not mean that the loss and damage to the house would have occurred at this level.
It is likely that until the water reached the floor level no loss and damage would have occurred, to the interior of the house.
RE says the flood level at the house would have been approximately 115.9mAHD. This is approximately 0.7m above the floor level.
I am satisfied that it is likely some inundation occurred to the property on 14 October 2022, but not necessarily to the interior of the house above floor level.
RE says the peak level recorded at the C River at R Town gauge of 115.7mAHD at 10 minutes past midnight on 15 October 2022.
Nothing has been provided by the insurer to show when the river system likely breached its bank or when the water is likely to have reached the house and, in particular, the floor level.
There is some distance from the river to the house and I accept that it would take time for the water to reach the house once the water overflowed the river bank.
I am satisfied, on the information provided and on balance, that flood water likely reached the property sometime after the complainant’s son visited the property on 14 October 2022.
What is crucial to this claim is when the loss and damage occurred.
Loss and damage is defined as “Physical loss or physical damage”
Nothing has been provided which confirms when the water is likely to have reached the floor level and caused loss and damage to the house.
I am surprised that RE’s report left blank the table which set out likely inundation times or dates. The response to that by the insurer, when raised by the complainant, is very general and inconclusive as to the likely time of loss and damage. Given the information provided by the complainant’s son there is approximately 19 to 20 hours for the flood to reach the property and then obtain a height to cause the loss and damage to the internal area of the house.
I would have expected that the insurer would have provided information or timeline as to the inundation stages at the property. In the absence of this I can only be satisfied that the water reached the property but not the internal area of the house prior to 8.07am on 15 October 2022.
Thus, I am not satisfied that the internal damage to the house occurred prior to 8.07am on 15 October 2022. I am satisfied that it is likely any loss or damage that occurred outside of the house was prior to 8.07am on 15 October 2022.
Whilst nothing has been provided by the complainant to show whether the property was inundated after 8.07 am on 15 October 2022. This onus on is on the insurer.
In such circumstances the insurer has not established, on balance, that the flood cover was inoperative at the time of the loss and damage to the house above floor level.
The information provided in the NORTH Central CMA, 2023 report has been provided as an attachment to RE’s report and nothing has been provided to dispute its contents.
In these circumstances I am satisfied:
I am satisfied the insurer has failed to show that the damage to the house above floor level occurred prior to 8.07 am on 15 October 2022.
Whilst the floor level ( 115.8mAHD ) is approximate, I am satisfied that there is sufficient information to show that the grounds below floor level would, on balance, have occurred prior to the operation of the flood cover.
The insurer is to meet the terms of the policy in relation to the internal damage to the house.
The insurer is entitled to deny coverage in respect of damage to the house below floor level and that would include the air-conditioning units that were situated outside the house.
The available information indicates, on balance, the flood damage occurred within 72 hours from taking the flood option in respect of the grounds of the house. The policy excludes loss or damage in these circumstances. It would not be fair to require the insurer to cover damage which is excluded under the policy. However, the information provided, on balance, does not indicate the damage to the house above floor level (approximately 115.8mAHD) occurred prior to the operation of the flood cover. It would be unfair to exclude that damage.
AFCA has determined this complaint based on what is fair in all the circumstances, having regard to:
The respective parties have completed a full exchange of the relevant information, and each party has had the opportunity to address any issues raised. We have reviewed and considered all of the information the parties have provided.
While the parties have raised a number of issues in their submissions, we have restricted this determination to the issues that are relevant to the outcome.
AFCA is not a court of law. We do not have the power to take or test evidence on oath, or to require third parties to give evidence.
When we assess complaints, we consider:
We give more weight to documents created at the time the events occurred. If there are no relevant documents, we will decide what most likely occurred based on the available information.
If there are conflicting recollections and these are evenly weighted, we may find that a claim cannot be established.
Record | Key points |
Insurer’s expert (RE) Hydrology report 14-03-2023 |
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