Suncorp Insurance Liable for Water Damage Caused by Leaky Pipes

An investigation determined that the leak originated from a supply pipe in the toilet, with evidence of water "hissing" in the walls. Despite this, Suncorp initially denied the claim, attributing the damage to a combination of factors including missing grout between tiles in shower screens and unsealed shower spindles.

Suncorp argued that the homeowners' insurance policy excluded coverage for damage caused by a gradual process of liquid leaking, splashing, dripping, or overflowing, which they believed applied in this case. However, the Australian Financial Complaints Authority (AFCA) found that this exclusion typically refers to damage occurring over months or even years, rather than within a short period of time.

Inconsistent Findings

AFCA highlighted the inconsistency between Suncorp's claim that the leak had been ongoing for months and the investigator's report of the "hissing" sounds from the water damage. They argued that a hissing supply pipe would likely result in a significant amount of water escaping in a short period of time compared to a pipe that only leaks when in use.

AFCA further stated, "It is unclear how [Suncorp] can accurately estimate the timeframe in circumstances when it is not clearly established how much water was leaking from the pipe. It is conceivable this would result in damage in days, maybe weeks. Further, it is not clear why mould would not manifest relatively quickly in a wet and poorly ventilated environment."

Ruling and Compensation

As a result of the dispute, Suncorp was required to accept the claim for the damage caused by the leaky pipe. Additionally, they had to award the homeowners $500 for non-financial losses related to delays in communication during the claims process.

A Wider Issue

This case highlights the broader issue raised by a recent inquiry by the Code Governance Committee (CGC), which found that many insurers rely on wear and tear exclusions to deny home insurance claims. In response to these findings, the Insurance Council of Australia has announced a review of the CGC inquiry.