Flood victim's claim wiped out by 72-hour exclusion

An insured homeowner whose property was damaged by floods is unable to claim because he bought the policy just two days previously.

The man purchased the Hollard home and contents policy on March 17 last year and his entire home was inundated with river water on March 19.

The insurer denied the claim because damage caused by a flood within 72 hours of the start of the policy is excluded.

The claimant took his case to the Australian Financial Complaints Authority (AFCA) arguing that Hollard did not clearly inform him of the exclusion, and that he was led to believe the claim would be accepted.

But AFCA says the exclusion was outlined in the Product Disclosure Statement (PDS) and during the online purchase process the complainant confirmed he had read and understood the PDS.

“The panel is satisfied that the insurer clearly informed the complainant of the policy terms in writing before the contract was entered into. Therefore, the insurer is entitled to rely on the policy terms.”

The exclusion does not apply if the insured transfers an equivalent policy from another insurance company without an interruption in cover.

But the property was uninsured from March 10 2021, when the complainant took ownership, to March 17. Therefore, AFCA says he cannot rely on the exception to the exclusion.

After the claim was lodged on March 20 the insurer provided temporary accommodation and removed damaged items, and the complainant says this gave him the impression the claim would be accepted.

On April 1 the insurer told the complainant the claim was under review, and it could not say when a decision would be made.

The complainant says he spoke to an employee of the insurer on April 12 and the 72-hour flood exclusion was mentioned, but the employee said it did not apply to “newly purchased properties”.

On April 20 the insurer wrote to the complainant saying it had denied the claim because of the 72-hour exclusion.

The complainant says it is unfair and unreasonable because he had been led to believe the claim would be accepted.

But AFCA says the insurer did not tell the complainant it would accept the claim, and if an employee said the exclusion didn’t apply to newly purchased properties, this was an error which was corrected within days.

“The insurer did not waive its right to deny the claim, breach its duty to act with the utmost good faith, or engage in unconscionable conduct,” AFCA said.

Hollard is not required to take any further action in relation to the claim.

Click here to read the full ruling.