You versus your home insurer

We look at cases taken up against home insurers when they refuse to pay claims. Who wins: the insurer or the insured?

My editor this week drew my attention to this BBC Inside Out episode, which followed Jock Trodden, a crusading water engineer who repairs burst main water pipes leading from your house to the drain under the street at no cost to you, and then gets the money back from your home insurance.

Sometimes the insurers will reject such claims, stating that the pipe must be damaged due to wear and tear, which home insurance policies don't cover. One insurer even says that the policyholder must prove the damage was accidental and not wear and tear. However, as the engineer explains, the pipes are made to last and shouldn't suffer from wear and tear, which means the damage wasn't inevitable and must be accidental. Furthermore, it's the insurer's responsibility to prove that the damage is not accidental. By being persistent, the engineer always gets his money back.

Most of us don't have such luck with our engineers. We have to contact our insurer immediately and, when gallons of water are seeping out of our gardens, we have to try to stop the wastage quickly. This can mean incurring large costs. Yet, if the insurer refuses to pay up even after you complain, you can contact the Financial Ombudsman Service (FOS). The FOS can order the insurer to pay up.

You should check the small print though, as you might not have appropriate accidental-damage cover and your policy might have additional exclusions.

Real-life examples

The FOS gets lots of complaints about water or oil damage claims. The FOS tells me it wants journalists to write about its case studies, and I'm only too happy to oblige. I've been using FOS case studies from Ombudsman News a lot in recent articles and I've been getting a good response, as readers can see real-life examples of what they should expect from their banks and insurers.

I've done some digging and found case studies regarding water and oil damage which I'm going to dust off for you and make somewhat less dry than you get in Ombudsman News!

Water damage is covered, but not the leak itself

Mr and Mrs G came back from holiday to find they had a leak. The insurer refused to reimburse them for the cost of calling an emergency plumber to find the source of the leak and fix it. However, it did cover the costs for repairing the damage caused by the flooding. The FOS agreed that this was appropriate. Indeed, that is how it is in most home insurance contracts.

Unoccupied property springs a leak

Mr and Mrs W came home from a three-month cruise to a burst water pipe and substantial water damage, including rotting floorboards. The insurer rejected the claim, as the small print says such claims are excluded if the home has been unoccupied for 60 days.

The FOS had evidence that most of the damage likely occurred within the first 60 days. With both precedent and the financial regulator's Insurance: Code of Business rules on the side of the customer, the FOS ordered the insurer to pay the majority of the claim, although it didn't have to pay the full cost of replacing the rotten floorboards, because they probably wouldn't have rotted much in the first 60 days.

Unloved oil heating system

Miss J's central heating failed due to sludgy deposits that had built up over the years, damaging the oil tank and pipes. It cost her almost £1,000 to fix, but the insurer refused her claim. The FOS rejected her complaint too, as the damage was caused by wear and tear (or lack of maintenance). In any event, the policy didn't cover blocked pipes – it covered escape of oil, but none had escaped.

Speak with your insurer immediately

Mr C claimed for water damage from a leak and for the cost of replacing his entire bathroom suite, including the wall and floor tiles, which the plumber said he had to pull out to find and fix the leak. The insurer paid for the floor tiles and water damage, but nothing else. On complaining to the FOS, his complaint was rejected, because his policy clearly stated he should notify the insurer immediately and preserve information and evidence, yet Mr C had not contacted the insurer till after the plumber had ripped out the suite and wall tiles. Also, the insurer provided acceptable evidence that the plumbers actions had been unnecessary.

New for old

Flooding at Ms K's caused serious damage to kitchen units. The insurer offered her 50% of the cost of replacing the units, because they'd suffered wear and tear. Ms K complained to the FOS, which ordered the insurer to pay the full costs on the grounds that 'like most home policies, this provided “new for old” cover' and it did not contain an exclusion here for wear and tear. Under the policy the insurer could also repair the units, but the FOS thought the evidence showed that this wouldn't be a reasonable solution.

Rain and dilapidated roofs

Mr K (no relation to Ms K, we presume) claimed for storm damage to his roof after water leaked through. The insurer rejected the claim, because there was no storm at the relevant time and the roof was in such a poor state of repair that rain water would have entered without a storm. It offered 10% as a goodwill gesture, but Mr K wasn't happy.

The FOS rejected his claim. The substantive evidence showed the roof was in a very poor state of repair, so it decided the main cause of the water damage was lack of maintenance, and no home insurance covers maintenance costs.

You win some, you lose some

As you can see, it's a mixed picture depending on your circumstances. I hope that you don't need to use your insurer or have your claim rejected, but if you need to complain to the FOS you can read how on its website.

More: Get a £2,000 refund from your credit card provider | Get cash for switching your energy tariff

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