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No cover for faulty workmanship

Henry’s house was damaged by significant rainfall during the Auckland Anniversary Weekend floods. The rainfall caused water damage to the property, particularly to the wall and around one of the doors.

Henry made a claim to his insurer, so the insurer appointed a loss adjuster to assess the damage. The loss adjuster found that faulty workmanship and the deterioration of silicone sealant caused the water to leak into the property. The insurer declined Henry’s claim, as damage due to faulty workmanship was excluded under the insurance policy. Henry disagreed with the insurer’s decision and complained to FSCL.

Dispute

The insurer said that there were issues with the standard of workmanship and design of the pergola roof. One of the pergola’s wooden beams had been screwed into the external wall of the property, and each screw created a gap in the wall. They noted that someone had attempted to seal the gap using silicone, but this had deteriorated, allowing water to leak through. The insurer said that the design of the pergola roof was faulty, so the damage was excluded under the policy.

Henry disagreed with the insurer and hired a builder to assess the cause of the damage. The builder found that the insurer’s assessment was incorrect, and the pergola roof was not the cause of the leak. The builder said that poor construction of the parapet caused the leak. The builder said that the parapet was not sloped, so it had been pooling water and leaking down the side of the house, into the pergola. The builder agreed that the construction of the parapet was not up to today’s standards, but it complied with regulations at the time it was built. As Henry had not changed or modified the parapet, he considered that the insurer should accept his claim.

Henry complained to FSCL.

Review

We found that the reports from both the insurer’s loss adjuster, and Henry’s builder, showed that faulty workmanship was the main issue. The insurer said that faulty construction of the pergola caused the leak, and Henry’s builder found that faulty construction of the parapet caused the leak. We told Henry that even if we dismissed the insurer’s findings, and accepted the builder’s report he provided, the damage was still excluded under the policy.

We acknowledged the comments from Henry’s builder, that the parapet complied with building regulations at the time it was built. However, we explained that the policy exclusion excluded damage caused by faulty workmanship, rather than a failure to comply with building regulations.

We agreed with the insurer that the damage was excluded under the policy.

Resolution

We decided that Henry discontinue his complaint.

Insights for consumers

All insurance contracts contain exclusion clauses. Consumers should ensure that they read their policy carefully, so they understand when cover will, and will not, be available.