Left out in cold without any cover

ROB STOCK
Last updated 11:12 12/02/2012

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A householder tried to persuade the insurance ombudsman that their insurer should pay for damage from the September 2010 Christchurch earthquake, even though premiums on their house insurance had not been paid since 2006.

That is one of a number of desperate but fruitless attempts by property owners to get insurers to pay up for earthquake damage revealed in ombudsman case notes released to the Sunday Star-Times.

But while failing to notice that you had not paid your premiums for the better part of four years may seem hard to fathom, other property owners were tripped up by pure bad timing and policy wordings that prevent claims many might think should be covered.

The case notes, which do not name individuals or insurers, underline the need for policyholders to read their policies and take responsibility for ensuring their insurance has not lapsed. Even very short gaps in cover can result in devastating financial losses.

The casenotes included:

Unpaid premiums

Four months after Mrs C's husband arranged a house insurance policy, the insurer cancelled it as premiums were not paid. Mrs C's home was damaged in the September 2010 earthquake and rendered uninhabitable by the massive shake in February 2011. Mrs C felt the insurer should cover the damage as it had not informed her the policy was cancelled. The ombudsman ruled that though the insurer could not prove it had sent a notice of cancellation, Mrs C should have noticed she was not paying for cover and the insurer did not have to pay.

Terrible timing

On August 30, 2010, Mr X told his bank he wanted to cancel his insurance. It followed his instruction immediately, only for the September earthquake to strike. Mr X did not believe the policy was cancelled legally, as he did not do it in writing, but the policy said only that the policyholder "can" tell the insurer in writing. The ombudsman ruled the insurance was cancelled properly.

Tenancy gap

Landlord Mrs F's insurer refused to pay for the loss of rent she suffered after the property she owned was rendered uninhabitable in the September earthquake. The policy stated that the loss of rent benefit was only payable if the house insured "is let, lent, leased, rented or tenanted" when the damage occurred. Mrs F had just refurbished the property with the intention of letting it out again following tenants moving out in August. A second case hinged on the same tragic tenancy gap.

Business interrupted

A business which decided it was not adequately covered was to move to a new insurer on March 1. At that point it would have added a new policy covering losses from business interruption. When the February earthquake struck, the business felt the new insurer should cover its business interruption losses because the insurer's adviser had not adequately advised the business of the start date for the new cover. The ombudsman found for the insurer.

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Secret car parks

A landlord believed car parks he had let out separately to a rental property he had insured should have been covered for damage caused in the two earthquakes. The insurer did not, saying that the policy specified what constituted the "home" insured by the policy, and that the definition did not include car parks let out to someone other than the tenant in the home. The ombudsman agreed, finding the landlord had not informed the insurer of the existence of the car parks, something the insurer said would have resulted in a higher premium. Accommodation benefit

A woman's insurer refused to continue paying her temporary accommodation benefit covering the extra costs of temporary alternative accommodation after her rented home was made uninhabitable by the February earthquake when she signed a year-long "permanent" tenancy agreement for another rental property. The ombudsman found, however, that the landlord of the damaged property had agreed to have the woman back once the first renter was repaired, and the woman stated she intended to take her up on that. The ombudsman said the insurer was unreasonable to decline to pay the benefit, as it was wrong to call the new tenancy agreement evidence that she had permanently moved.

Quote frustration

One earthquake-damaged driveway attracted quotes of $3550, $1365, $10,200, $13,052, and $2101 to fix. The policyholder, who had commissioned two of those quotes, lost patience and complained to the ombudsman when the insurer obtained the last, $2101, quote.

The ombudsman asked for another assessment of the damage.

It came in at $5091 and the complainant settled with the insurer.

- Sunday Star Times

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