Insurer wins dispute over flooded garage 'seepage' exclusion

A complainant who lodged a claim for water damage after her garage was inundated will not be compensated after a dispute ruling backed her insurer’s decision to deny the claim.

The homeowner lodged a claim on January 17 last year after her property was hit by heavy rainfall a few days prior, which caused the garage to be flooded.

She said that “a lot of water” came through the house’s storage into the garage, which carried a “rotten smell”. The claimant was also concerned that the skirting board may get damaged and the water would run beneath the home.

Suncorp did not dispute that the property and its contents had been damaged by water but said that this was due to water seeping through the garage’s rear wall, which was positioned next to soil. It highlighted that the policy held exclusions for damage caused by “seepage of water”.

An insurer-appointed restoration consultant inspected the property twice, reporting that the garage held high moisture levels and several items had been non-restorable.

They could not find the source of the water’s entry and recommended a builder investigate the matter. The claimant did not appoint any building professional to inspect the damage.

Suncorp engaged with building consultants, referred to as RC, the day after the claim had been filed. RC noted that the building was positioned on a “steep block of land,” which would likely cause stormwater runoff to flow towards the front of the house.

It said stormwater from the back would enter the subfloor area behind the rear garage wall where there had been a build-up of earth.

The building consultants said that the water seeped through the earth into the timber frame and plasterboard, which caused damage to the wall linings and skirting boards before trickling through the rear wall.

The report also noted that the complainant had told them that similar water seepage had occurred previously and advised her to upgrade her drainage systems to prevent further leaks.

The Australian Financial Complaints Authority (AFCA) said it was satisfied by RC’s assessment of the cause of the damage, noting that the claimant had not provided any alternative expert evidence.

“I am satisfied the available information shows the damage to the insured property was caused by water seepage through soil in the sub-floor and then rear garage wall,” AFCA said.

“The policy excludes loss or damage that is caused by, connected with or arising from, or liability caused by, connected with or arising from seepage of water.”

The ruling acknowledged that the claimant had been aware of the issue previously and failed to take action to rectify the problem.

“I accept the photos of the damage to the timber frame and plasterboard sheeting support the view that this was not the first time such water seepage has occurred,” AFCA said.

“While this may be the first time the complainant noticed a high extent of water ingress, I am satisfied the available information shows that water ingress into and associated damage had happened previously.”

AFCA said that Suncorp showed that the cause of the damage was due to an event not covered by the policy and that it was entitled to decline the claim.

Click here for the ruling.