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case studies

case study A

A leak from Mr T’s washing machine caused damage to his kitchen walls and flooring. It also caused the joists to become rotten and the floor eventually collapsed.

Mr T’s insurer agreed to pay for some of the damage – but not the damage caused gradually, including the rot. Its insurance policy said it wouldn’t pay for gradual damage in general and it specified it wouldn’t pay for rot.

The evidence we saw showed that the leak was behind the washing machine, so neither the leak nor the damage it was causing was noticed until the floor collapsed. We concluded that the damage was caused by something covered by the policy – a leaking pipe. We agreed with the insurer that the damage happened gradually, but we thought Mr T couldn’t reasonably have been aware of it until the floor collapsed and he made the claim.

The insurer’s decision to decline the claim was in line with the terms of the insurance policy as it excluded gradual damage. But we didn’t think the insurer’s decision was fair, as Mr T couldn’t have known about the damage or done anything to prevent it. We thought that was equally true of all the gradual damage, including the rot. We upheld the complaint.

case study B

Mr and Mrs Y made a claim for water damage in a bedroom. The insurer found a problem with the heating tank that had caused a leak in a pipe. It said water leaks were covered by the policy – but it thought this leak had happened over a long period of time and caused significant damage. It declined the claim as the policy excluded gradual damage and it thought Mr and Mrs Y should have been aware of it happening.

Although they accepted the leak had likely been going on for a long time, Mr and Mrs Y said they didn’t know about it. The damage was in a spare bedroom that they rarely used so they didn’t spot it initially. But when they did notice it, they made their claim straightaway.

Both the consumers and the insurer agreed that the damage was caused by an insured event and that it happened gradually. We saw evidence of considerable water staining and mould growth to the decorations in the bedroom. Although we accepted that Mr and Mrs Y may not have chosen to use the room very often, we thought they could have been aware of the damage happening. There were clear signs of long-term water damage on the outer surface of the bedroom wall and it wasn’t obstructed by heavy furniture. Mr and Mrs Y had also known of problems with the heating system for many months but hadn’t investigated it. We thought the extensive water damage could have been prevented by Mr and Mrs Y. We decided it was fair for the insurer to decline the claim.

case study C

Mrs B’s kitchen ceiling collapsed. She discovered that a pipe between the kitchen ceiling and the upstairs floor had been leaking. Over time the water had pooled and eventually became heavy enough to cause the collapse.

The insurer accepted that the damage had been caused by an insured event, escape of water, but declined Mrs B’s claim. It said the leak had been going on for some time and it pointed out an exclusion in the policy for any damage caused gradually. It thought Mrs B would have been aware of the problem long before she made the claim. The insurer said the joists were rotten, so they thought the floor above would have indicated an issue when Mrs B walked on it. And it thought the ceiling below would have shown signs of staining to Mrs B long before it collapsed.

Mrs B said she reported the claim within days of the ceiling collapse and hadn’t noticed any obvious signs of a problem before that.

We agreed that the damage was caused by an insured event and that it happened gradually. But we didn’t think Mrs B ought reasonably to have been aware of it. The leak itself was concealed between the floor and ceiling and we weren’t satisfied that walking on the floor would necessarily have indicated to Mrs B that there was a leak below. The photos we saw of the ceiling didn’t show clear signs of water staining. We upheld the complaint.

case study D

Mr and Mrs C discovered a patch of damp on their dining room wall. The insurer established that this damp was caused by a leaking pipe and agreed to pay to repair and redecorate the wall.

Dry rot was discovered in the floorboards of the dining room. The insurer didn’t agree to pay to repair the floorboards because the policy excluded damage caused by rot.

A plumber inspected the sub-floor and found that a lack of ventilation coupled with rising ground water had caused excess moisture, which in turn had caused the dry rot.

We agreed with the insurer that the rot damage had been caused gradually. And we agreed with Mr and Mrs C that they couldn’t have known about it happening gradually as the problem was concealed. But we didn’t think the rot had been caused by something the policy covered. Like the vast majority of policies, there was no insured event for rising ground water or excess moisture. As the policy didn’t cover the cause of damage at all, it was irrelevant whether it had been caused gradually or whether Mr and Mrs C were aware of it happening. We didn’t uphold the complaint.

case study E

Miss K noticed a stain had appeared on her lounge ceiling. Her plumber found that the waste pipe from the shower room above the lounge had a small hole in it and so water had been slowly leaking. Over time enough water built up to soak through to the lounge ceiling and cause the stain to appear.

Miss K had an ‘all risks’ policy which covered damage, unless it was caused by a policy exclusion. One of those exclusions was for damage caused gradually. The insurer declined the claim for that reason.

We were satisfied that the damage was caused in a way that most standard household policies would cover – an escape of water from a pipe. Miss K had taken photos of the ceiling on the day she made the claim. We thought they showed that the stain was relatively new – it hadn’t spread very far and there were no signs of mould or darker, more significant staining that might develop had it been there for a long time. And because the shower pipe was underneath the floor of the shower room, we didn’t think Miss K could have been aware of the slow leak until the stain appeared on the ceiling below.

We agreed that the damage had been caused gradually. And that meant the insurer’s decision to decline the claim was consistent with the policy wording. But we didn’t think it was fair to decline it because Miss K claimed for damage that’s usually covered by standard policies, she couldn’t have known the damage was happening, and she’d reported the damage to the insurer reasonably soon after she noticed it. We upheld the complaint.

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  • The law requires us to decide each case on the basis of our existing powers and what is fair in the circumstances of that particular case.
    We take into account the law, regulators' rules and guidance, relevant codes and good industry practice at the relevant time.
    We do not have power to make rules for financial businesses.
    Our current approach may develop in the light of circumstances disclosed by further cases we receive.
    We may decide that fairness requires a different approach in a particular case.