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Determination
Case number | 12-00-1059494 |
Financial firm | Allianz Australia Insurance Limited |
Case number: 12-00-1059494 5 September 2024
The complainant holds a home insurance policy with the financial firm (the insurer). She lodged a claim after heavy rain caused her pool to lift out of position.
The insurer says the damage was caused by hydrostatic pressure, which the policy excludes from cover. The insurer denied the claim.
No. The policy defines ‘hydrostatic pressure’ as ‘pressure exerted by a fluid due to gravity’. The damage was caused by water pushing the pool upwards, against the force of gravity. This does not fit the policy’s definition of ‘hydrostatic pressure’.
The available information indicates the insured property was damaged by rainwater, which the policy provides cover for. The insurer has not established the application of any relevant policy exclusion. Therefore, it is fair for the insurer to accept the claim.
This determination is in favour of the complainant.
The insurer must accept the claim and settle it in accordance with the policy terms
No. The policy defines ‘hydrostatic pressure’ as ‘pressure exerted by a fluid due to gravity’. The damage was caused by water pushing the pool upwards, against the force of gravity. This does not fit the policy’s definition of ‘hydrostatic pressure’.
On 2 January 2024, the complainant lodged a claim saying her pool had lifted out of position. She said the pool was fine when it was used on 31 December 2023
The complainant said the damage occurred on 1 January 2024. Later, she said this was incorrect, and the damage occurred on 2 January 2024.
The insurer appointed a builder, who inspected the pool on 17 January 2024. The builder said:
It is our opinion the resultant damage was caused by a severe storm on 1 January 2024. It is our opinion that the excessive deluge of rain during the storm has caused a build-up of water around the sides and under the pool which has forced the pool out of the ground slightly.
The insurer appointed an engineer, who inspected the pool on 19 January 2024. The engineer said:
It is our professional opinion that the damage to the pool has been caused by hydrostatic pressure exerted on the pool, due to a raised ground water table influenced by the recent storm events experienced in the greater Brisbane area.
The complainant appointed a pool retailer, who inspected the pool on 1 February 2024 and said:
The damage is a result of an inundation of a rain water and outside flood waters caused by a recent localised flooding event in the area… I can confirm flood water has entered behind the pool walls and through the ground at an extremely rapid rate causing the pool to then uncontrollably hydraulic lift out of the ground…
A party making an insurance claim must establish they suffered a loss that is covered under the insurance policy. They must establish this on the balance of probabilities (i.e. that it is more likely than not).
If a claimable loss is established, the insurer must accept the claim, unless it can establish the application of a relevant exclusion. The insurer must establish the exclusion on the balance of probabilities.
The cover provided by the policy is set out in the product disclosure statement. Relevant policy terms are quoted in section 3.2 of this determination.
The policy is an ‘insured events’ policy, meaning it only covers damage caused by specific events. The insured events include:
The insurer says the damage was not caused by a storm. However, the insurer ‘accepts that the storms would have added to the ground water table’, and says the rise in the ground water table caused the damage.
There is no dispute that heavy rain occurred at around the same time as the damage. All three experts who inspected the pool said the recent heavy rain was the cause of the damage.
Having considered the information provided by both parties, I am satisfied the damage was caused by rainwater. Therefore, the complainant has established a claimable loss. The insurer must accept the claim, unless it can establish the application of a relevant exclusion.
The ‘storm’ and ‘flood’ sections of the policy exclude cover for damage caused by ‘hydrostatic pressure’. The insurer says it is entitled to apply this exclusion to deny the claim.
The policy defines ‘hydrostatic pressure’ as follows:
Pressure exerted by a fluid due to gravity. An example of where hydrostatic pressure may cause damage to your property is where you have emptied your in-ground fibreglass swimming pool for maintenance purposes and there is heavy rainwater or a flood. If the pressure exerted on the empty pool by water which has soaked into the surrounding ground, exceeds the weight of the empty pool, it can cause it to ‘pop’ out of the ground.
The damage was caused by the force of water pushing the pool upwards. The insurer’s engineer called this ‘hydrostatic pressure’. However, the force was not being exerted due to gravity. The force was pushing upwards, against the force of gravity. This force does not fit the policy’s definition of ‘hydrostatic pressure’.
The policy’s definition of ‘hydrostatic pressure’ is followed by an example, which appears to match what happened to the complainant’s pool (except that the complainant’s pool was not empty). However, the example does not override the definition.
The force that caused the damage does not fit the policy’s definition of ‘hydrostatic pressure’. Therefore, the insurer is not entitled to apply the exclusion. The insurer has not said there are any other exclusions that could apply to the claim.
The complainant has established a claimable loss. The insurer has not established the application of any relevant exclusion. Therefore, the insurer must accept the claim and settle it in accordance with the policy terms.
The policy says the insurer can settle a claim by repairing damage or paying the cost of repairs.
The insurer has not said whether it would prefer to repair the damage or pay the cost of repairs. The complainant has not said how she would prefer the insurer to settle the claim.
The insurer must decide how it will settle the claim. It must be fair when making this decision. If the complainant expresses a preference as to how the insurer should settle the claim, the insurer must consider this. If it is not willing to settle the claim the way the complainant wants, it must explain why.
The insurer may ask the complainant to provide information, or access to the property, to help it decide how to settle the claim. The complainant must comply with the insurer’s reasonable requests.
If the parties cannot agree on a fair claim settlement, the complainant may lodge another AFCA complaint.
Under the AFCA Rules, we can award up to $6,300 compensation for non-financial loss if a complainant suffered an unusual degree of stress, inconvenience, or delay because an insurer mishandled a claim.
The insurer verbally advised the complainant her claim would be accepted. Later the same day, the insurer called her and wrote to her saying it may not accept the claim because its engineer said the damage was caused by hydrostatic pressure. The complainant says the initial incorrect advice caused her significant distress, anger, and frustration.
The insurer incorrectly told the complainant it had accepted her claim. However, it corrected this error the same day. In my view, this does not warrant an award of compensation.
The available information indicates the insured property was damaged by rainwater, which the policy provides cover for. The insurer has not established the application of any relevant policy exclusion. Therefore, it is fair for the insurer to accept the claim.
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. I have reviewed and considered all of the information the parties have provided.
While the parties have raised a number of issues in their submissions, I have restricted this determination to the issues that are relevant to the outcome.
What you’re covered for under each of the insured events (pages 16 – 23) | ||||
…the policy covers loss or damage to your buildings and/or contents caused by one or more of the following insured events that take place during the period of insurance… | ||||
Storm, cyclone, rainwater or run-off
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Flood
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Claims (pages 57 – 66) |
How we settle your claims Buildings claims If we agree to cover your claim for loss of or damage to your buildings, we will pay the reasonable cost of repairing or rebuilding the damaged part of your buildings to the same condition as when it was new. At our discretion (acting reasonably), we may:
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Definitions (pages 73 – 56) | ||||||||
Some of the words in this policy have special meanings wherever they appear. These words and their meanings are defined below.
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