Insights for consumers
Insurers typically expect you to report any potential claim promptly and take steps to minimise further damage. Failing to do so may lead the insurer to claim that they have been prejudiced by the late notification and decline to pay out the full claim.
What happened?
Jiya owned commercial office space that she converted into several office spaces for renting. The insurance for the units was managed by the Body Corporate.
In February 2023, one of the office spaces was damaged during the Auckland Anniversary floods. Jiya immediately asked the Body Corporate if the damage would be covered by insurance. She followed up again in April. In June, the Body Corporate sent Jiya a claim form to fill out. Jiya sent the form back in late November, and the claim was submitted to the insurer in January 2024.
By this time, the insurer was unable to confirm that the damage had been caused by the Auckland Anniversary floods. However, the insurer, in good faith, accepted Jiya’s claim.
Jiya also claimed for lost rent, as she was unable to rent out the office space while it was damaged. The insurer agreed to pay the loss of rent from the day they were notified of the claim until the day the damage had been repaired, a period of seven months.
What were the parties’ views?
The insurer thought the cover they provided was fair, given the late notification of the claim. If the insurer had been notified of the claim sooner, the loss of rent period could have been avoided, or at least minimised.
Jiya disagreed, arguing that the insurer should pay the loss of rent from the day the damage occurred, to the day it was repaired – a period of 14 months. Jiya said she first notified the Body Corporate about the damage in February 2023, so she considered she had submitted her claim promptly. If the Body Corporate caused delays, the insurer should address this with them.
What was FSCL’s view?
According to the policy, if anything happens that may lead to a claim, the insured must tell the insurer as soon as possible. We noted that Jiya had submitted her insurance claim over 11 months after the damage occurred.
As soon as the insurer was notified of the claim, they took immediate action, and all the necessary repairs were completed within seven months. If Jiya had notified the insurer of the claim earlier, it is likely the repairs would have taken place within this timeframe, and loss of rent cover would only have been required for seven months.
Jiya raised a concern that the insurer did not tell her that loss of rent would only be available from the day the claim was submitted. However, we noted that the obligation to notify the insurer of the claim as soon as possible was clearly set out in the policy, and Jiya was responsible for complying with this.
We did not think it would be fair to exclude Jiya’s entire claim because of this. However, it would also not be fair to ask the insurer to cover the full loss of rent period, when they were not given the opportunity to properly investigate the cause of the damage or mitigate their loss. We decided that the seven months the insurer had already paid out was a fair middle ground.
We acknowledged that the Body Corporate appeared to have caused some delays, but we explained that this was not the insurer’s responsibility. We suggested that Jiya raise any concerns about the Body Corporate with them directly.
What was the outcome of FSCL’s investigation?
We suggested that Jiya discontinue her complaint. Jiya disagreed, so we issued a final decision, not upholding the complaint.
