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Determination
Case number | 1054117 |
Financial firm | Open Insurance Pty Ltd |
Case number: 1054117 14 May 2024
The complainant holds a contents insurance policy with the financial firm (insurer).
On 29 December 2023, the complainant lodged a claim after he noticed blood stains on the carpets and mattresses from his pet dog.
The insurer declined cover on the basis that the policy does not respond to the loss suffered.
No. The complainant has established a claimable loss for ‘accidental damage’.
The insurer has not shown, on balance, the exclusion for ‘scratching, chewing, tearing or soiling by any animal’ applies to the circumstances of the claim.
The insurer is not entitled to decline the claim.
I do not accept it is fair for the insurer to limit its liability when it has not explicitly stated in the policy that bleeding by any animal is excluded.
This determination is in favour of the complainant.
The insurer is required to meet the complainant’s claim under the terms and conditions of the policy, and in accordance with this determination.
No. The complainant has established a claimable loss for ‘accidental damage’.
The insurer has not shown, on balance, the exclusion for ‘scratching, chewing, tearing or soiling by any animal’ applies to the circumstances of the claim.
The insurer is not entitled to decline the claim.
It is accepted insurance law that the complainant carries the initial onus to establish, on the balance of probabilities (that is, more likely than not), a loss which is covered by the terms and conditions of the policy.
Only if the complainant can do this, will the onus shift to the insurer to show, on balance, it is entitled to decline cover in line with the policy wording or otherwise.
The complainant holds a contents insurance policy with the insurer.
On 29 December 2023, the complainant lodged a claim for damage to contents items caused by a pet dog residing within the property. The date of loss was recorded as 14 December 2023. The description at claim lodgement stated:
when we woke up in the morning, we found several blood stains on the carpet and mattresses of two of our bedrooms. Snoopy, our pet dog had bled through his anus throughout the night.
The complainant says the damage was accidental, and there was no way or means for him to prevent the damage occurring.
The complainant seeks acceptance of the claim.
The complainant’s policy is an ‘insured events’ policy. This means that not all loss and damage is automatically covered. Rather, only loss or damage caused by one or more of the insured events and not subject to the exclusions, is covered. One of the insured events under the policy is ‘accidental damage’.
The insurer does not dispute that an event covered by the policy occurred, and that loss or damage has occurred because of this event. In this case, the insurer considers the claim to fall under the event of ‘accidental damage’.
Accordingly, the onus falls on the insurer to establish that, on balance, the loss or damage is excluded under the policy.
The insurer says the loss falls within the scope of the following exclusion:
You are not covered for any loss or damage caused by or resulting from, or the costs incurred from or of:
…
• scratching, chewing, tearing or soiling by any animal;
The insurer submits that the act of bleeding caused damage by way of staining the mattresses and the carpets, causing them to become dirty, or besmirched. As such, the insurer considers this act of bleeding to fall within the common definition of ‘soiling’.
The insurer says this exclusion exists to capture the most common loss or damage risks with keeping an animal inside a home, of which soiling is one, and it is reasonable to include bleeding within the scope of this exclusion.
The insurer notes the policy does not provide a definition for ‘soiling’. It relies on the general definition provided by the Macquarie Dictionary, as follows:
Soil
verb (t) 1. to make dirty or foul, especially on the surface: to soil one’s clothes.
2. to smirch, smudge, or stain.
3. to sully or tarnish, as with disgrace; defile morally, as with sin.
4. to make foul with excrement: to soil one’s pants.
–verb (i) 5. to become soiled.
–noun 6. the act of soiling.
7. the fact or state of being soiled.
8. a spot, mark or stain due to soiling.
9. dirty or foul matter; filth; sewage.
10. ordure; manure or compost.
The insurer maintains the exclusion contemplates that the behaviour of animals can be unpredictable, with the overarching risk being that the acts of soiling associated with an animal can occur suddenly and without warning or a means of prevention. The insurer says the act of bleeding carries an equivalent risk to alternative acts of soiling, such as urinating, defecating or vomiting, in that it can happen without warning and it would not be expected that the animal would take actions to prevent this occurring.
There is no dispute the damage was caused by an act or acts of bleeding which were from an animal located within the property.
However, I am not satisfied, on balance, the exclusion relied on by the insurer applies in this case. Firstly, nowhere does the policy explicitly exclude ‘bleeding’ by any animal, nor is that word defined in the policy.
As noted, the insurer seeks to consider the act of bleeding to fall within the common definition of soiling. In circumstances where the complainant’s policy does not define soiling, it is therefore necessary to apply principles of policy interpretation for its meaning. The question of whether ‘soiling’ can reasonably be interpreted to include ‘bleeding’, needs to be considered in the context of the clause and the policy.
The exclusion specifically lists actions or risks associated with an animal being present at the insured address which are not covered, namely: ‘scratching, chewing, tearing or soiling’. I am not satisfied the wording is helpful in alerting the complainant to the possibility that ‘bleeding’ might not be covered. The fact that bleeding was not included in an exclusion clearly drafted to address the risks associated with an animal being present at the insured address indicates, in my view, that ‘bleeding’ was not meant to be excluded. If that exclusion had been intended to apply to ‘bleeding’ as well, then ‘bleeding’ could and should have been specified.
When excluding damage, an insurer must be specific as to the loss being excluded. A policy exclusion is not meant to be read broadly to expand the meaning of the clause.
To the extent that any ambiguity remains as to the application of the relevant exclusion, I am satisfied it is fair in the circumstances to interpret it in favour of the complainant; that is, that it does not encompass ‘bleeding’.
Claim is to be settled in accordance with policy terms
The insurer confirms that both carpets and furniture are contents items within the meaning of the policy.
For the reasons outlined, the insurer is not entitled to decline the claim, but is required to settle it in accordance with the terms and conditions of the policy.
AFCA has not been provided with sufficient detail as to the extent of the losses suffered. The parties are required to work together to determine this.
If the insurer cash settles the claim, the insurer is to pay interest on the settlement amount as set out in section 57 of the Insurance Contracts Act, calculated from the date of the claim denial until the payment date.
I do not accept it is fair for the insurer to limit its liability when it has not explicitly stated in the policy that bleeding by any animal is excluded.
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 the information the parties have provided.
While the parties have raised several 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.
Insured events (page 34 of PDS)
Accidental damage – applies to Comprehensive Cover only
• when your home is insured, we’ll cover you for damage caused unintentionally to your home;
• when your contents are insured, we’ll cover you for damage caused unintentionally to your contents
General exclusions (pages 54-56 of PDS)
You are not covered for any loss or damage caused by or resulting from, or the costs incurred from or of:
…
• scratching, chewing, tearing or soiling by any animal;
