Financial agony aunt Janine stark looks at the issues around insurance and storage containers.
OPINION: Dear Janine,
I placed a painting into a removals storage container during our earthquake repairs. The container was stored securely offsite but was outside in the sun. After four months it was returned to us. The painting was at the top of the container and the heat from the sun has damaged it beyond repair. My insurer has declined the claim because they say this was gradual deterioration. Should I pursue this through the insurance ombudsman?
That must feel like a real slap in the face. The earthquakes turn your life upside down. You are forced out of your house so your insurer can undertake repairs and all your precious things are put into storage (storage your insurer has paid for).
Then a painting that probably has special meaning to your family is returned to you "fried". But guess what? That's now your problem, because it got fried gradually over four months, not suddenly or accidentally.
It didn't have a fight with your toaster or fry pan; it simply curled up its toes in the hot New Zealand summer. You must be cross.
Your situation is likely to be the tip of the iceberg when it comes to the perils of storage containers. From Marlborough to Canterbury, people affected by the earthquakes are going to use short-term storage facilities.
Most have no experience with storing goods. Most have never read the "gradual damage" clauses in their contents policies and won't be directed to them when they ring to notify their insurer of the address where their goods are held.
SMALL PRINT, BIG PROBLEM
We lock up and sit back like happy smiling cherubs, thinking our insurer will pay up if things come back damaged. But there is always fine print and "gradual damage" is one of those clauses.
It sits buried amongst 20 other gems, which vary from the dog chewing the couch, bicycle punctures and design faults. For the avid reader, you might find a gradual damage clause (a mere five pages prior), which claims the opposite.
Don't feel smug and glance over that one too quickly. On inspection you'll find a narrow set of circumstances where hidden internal pipes in a house leak and cause gradual damage. It is solely a water related clause in most policies.
A quick look at my own contents policy and there's a clear statement that I'm not covered for "any other gradually operating cause".
Unless you are renting a fancy humidity controlled container, it could well be prone to a range of nasties.
Heat, leaks, condensation, mould and mildew could deteriorate your contents. Recently I transported goods in a shipping container and the range of insurance options involved paying more to get mildew cover.
That tells me that damage from lack of climate control is a risk. I've also been in your position of storing artwork recently. My solution was to put it in the spare room of a family member and added their address to our policy.
I've driven our broker mad ringing to make declarations of where things are stored, their value and when they are being moved. It all gets noted down on the file. A lot of people don't realise this is a possibility.
But please don't think I'm smarter than you - we still tipped a chainsaw up the wrong way in storage and green oily gunge sat on the floor for months. We all get bitten in different ways.
INSURERS NEED TO HELP
As for insurers, they are facing an unprecedented number of customers using storage facilities. It would be good to see them up their game.
When they are moving people out of homes, they could provide a list of things to be wary of, such as gradual damage and climate control issues.
Storage of linen, clothes, artwork or metal items prone to rust or corrosion, could suffer damage. Then we take risks with our eyes open, having been informed.
6 PER CENT SUCCESS RATE
The website of the insurance ombudsman (www.iombudsman.org.nz) has a great little tool called "search case studies". When you enter "gradual damage" it comes up with 52 cases (I restricted it to those involving contents insurance).
When I narrowed it down to the phrase "complaint upheld", only three cases have ever been successful and the last one was 10 years ago.
Don't drop to your knees in defeat just yet. Insurers only take on cases they think they'll win and this topic is well-trod ground. The cases on the site seem to be largely about water damage. A few involve leaking storage units.
None involve artwork, heat and earthquakes. What you need to remember is that every case turns on its own facts. And each policy has different wording.
You have a very specific set of circumstances resulting from the earthquake and your insurer requiring you to empty your home. To my mind that comes with additional responsibilities of speaking to you about how your protection will change in storage and the risks you need to consider.
But it's not about what I think, or whether they could have been more helpful. It's all about how your policy responds to your circumstances. I would suggest you phone the Ombudsman's office and have an initial chat. It is a free service and if you wish to proceed, follow the steps on the website, starting with a formal complaint to your insurer.
Janine Starks is co-managing director of Liontamer Investments. Opinions in this column represent her personal views and are not made on behalf of Liontamer. These opinions are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.
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