Insurers like to remind us of all the things we can't claim for (see Why your home insurance claim will be rejected) but the Financial Ombudsman Service has just given us some details about when the insurers are wrong.
Its focus is claims for water damage, which make up half of the buildings insurance claims made around this time of year, with many contents insurance claims also caused by the same problems.
"Most policies", writes the ombudsman, "do not define what a 'flood' is." The free complaints service for customers says that it often sees cases where there's a dispute over the definition of 'flood'.
But the ombudsman takes the view – which insurers have to accept when it makes rulings – that "a flood does not have to be a sudden and violent event". Nor does a flood have to be caused by the forces of nature, such as rivers bursting their banks, or even a storm.
To the insurers' consternation, the ombudsman says: “We take the view that a leaking pipe can be the cause of a flood just as a river bursting its banks can.” The ombudsman believes this is in line with customers' expectations.
It's also probably in line with the law, although the ombudsman is not constrained by strict rule of law if it believes that a different ruling is more fair in specific circumstances. The Unfair Terms in Consumer Contracts Regulations state that if the meaning of a contract term is unclear then the interpretation most favourable to the customer should be applied.
We cover “Loss or damage caused by flood”
When a policy has a vague definition like that, the ombudsman will usually decide that the policy covers flooding caused outside or inside the property.
The ombudsman will generally uphold customers' complaints when outside floodwater has led to damp inside.
It has even ruled in favour of customers when their homes haven't been damaged by the water. It gives the example of when flooding is so violent that it washes earth away and makes the building unstable.
Floods in basements and high water table areas
Underground rooms and properties in high water table areas often have 'tanking', which is heavy-duty protection against water seepage. Insurers sometimes argue that leaks through 'tanking' must be caused by wear and tear to the tanking, or 'gradually operating causes'. Insurance doesn't cover wear and tear, so it's the customer's duty to maintain their homes against it.
However, the ombudsman finds that customers should still generally be reimbursed for such flooding – as opposed to normal ground seepage – even if the flooding occurs gradually. It even expects the insurer to repair defective tanking itself, unless the insurer can show evidence that the customer knew that tanking was defective before the flood happened.
If tanking was capable of holding back normal ground water, the ombudsman will rule that the insurer should repair it.
Sometimes the ombudsman will insist that the insurer installs tanking where it was previously missing, if it believes that this is the only way to make effective, permanent repairs.
Discovering flood damage on moving home
If you move home and take out new insurance, and then discover that there's damage from a previous flood, it's industry practice for your new insurer to pay, unless it shows that the damage was caused by something other than a flood.
The ombudsman says it generally points this out to the insurer. On being told this, most insurers probably agree to pay up without waiting for an official ruling from the ombudsman.
The insurer might seek to recover some of its costs from the previous insurer and from the surveyor who failed to spot the damage before you moved in.
Compensation for stress and inconvenience
In some cases, if you and your family have been handled very unfairly by your insurer, it might order that you're paid extra compensation. In extreme cases, this might be if you were not temporarily housed in suitable accommodation similar to your home, for example.
The ombudsman rules in the customer's favour for around half of all buildings insurance complaints. It's certainly worth complaining if you can't resolve a dispute with your insurer and you feel you've been treated unfairly. There's no downside.
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