Insights for consumers
Insurance policies usually exclude pre-existing damage or faulty workmanship. Always check your insurance policy wording carefully when buying insurance and before making a claim.
Damaged cable causes power outage
Arjun owned a unit in a residential complex built in 2005. In August 2023, his tenants reported a power outage. An electrician discovered that the underground mains cable supplying electricity to Arjun’s unit had failed. To fix the problem, the driveway had to be cut open, and the cable repaired. Arjun claimed about $9,000 for repair costs and lost rent.
Insurer says damage occurred during construction
The body corporate’s insurer declined the claim. The insurer said the damage was likely caused by faulty workmanship during the property’s original construction or when other services were installed, long before the policy began in 2022. The policy only covered sudden and accidental damage during the policy period, and excluded the costs to fix faulty workmanship. The insurer also said there was no cover for lost rent because the material damage policy (for damage to the property) wasn’t triggered.
Accidental or pre-existing damage
Arjun believed the damage was accidental and should be covered. Arjun also felt the insurer delayed the claims process. Arjun complained to FSCL.
FSCL reviews the complaint
We agreed with the insurer that the claim was not covered. The damage giving rise to the claim was most likely caused by poor workmanship during the property’s construction in 2005, before the policy started. Even if the insuring clause had been met, exclusions for faulty workmanship and the costs to fix it would apply. It would be unfair not to apply the clear policy wording, which is the contract between the parties.
We also looked at whether the insurer caused unreasonable delays. While the insurer could have provided its complaints information sooner, this did not cause any delays. Overall, the insurer responded promptly and followed a fair process.
What was the outcome of the case
We recommended that Arjun discontinue his complaint. The insurer accepted our recommendation. Arjun disagreed but did not provide any new evidence or strong reasons for us to reconsider. We then closed our file.
