IFSO Case Study

The insured held insurance on her house. 

In April 2019, she made a claim to the insurer, because her dog had vomited and had diarrhoea, damaging the carpet at the house over the course of a day. 

The insurer accepted the claim. 

There were multiple areas of damage in many areas of the house. 

The insurer assessed the claim by dividing it into four areas: the lounge/dining area including the stairs and upstairs landing; the hallway; the bathroom/toilet area and the upstairs bedroom. The insurer paid $5874.40, which was the cost to replace the carpet in all areas, except for the bathroom/toilet area as the damage there did not exceed the excess. Three policy excesses were deducted from this amount, a total of $1200. 

The woman disputed the insurer’s decision to apply three excesses to the claim. She said the insurer paid her the cost of synthetic carpet, not the cost to replace her wool carpet, and she also wanted the insurer to pay her compensation for stress. 

IFSO said the policy allowed the insurer to deduct an excess of $400 from the claim for each incident. The policy defined incident as “something that happens at a particular point in time, at a particular place and in a particular way”. 

Where there were a number of individual losses (as in this case, each area of damage to the carpet), for them to be regarded as resulting from a single incident, there must be a close connection between the losses, in terms of time, location, cause and motive. 

The insured said all the vomiting/diarrhoea occurred over the course of one day. However, it happened at different times during the day and, therefore, the IFSO case manager did not believe all the damage could be regarded as the same incident. 

An incident is what happened, as opposed to the underlying cause for what happened. 

The dog’s vomiting/diarrhoea was the underlying cause; each time the carpet was damaged was a separate incident. It was reasonable for the insurer to apply three excesses, rather than a single excess. 

The insured said she had good wool carpet which cost $239 per metre. She said the carpet supplier told her that it could only provide a quote for synthetic carpet at $149 per metre. She said that the insurer paid the settlement based on the cost of a synthetic carpet, which she said was “not nice at all”. The carpet supplier said the client had a fleck wool Berber, and the equivalent synthetic carpet was priced at $149 per metre. The supplier also stated that he had said to her she might want to go to a synthetic carpet as it would wear better and clean up more easily. 

IFSO said the insurer paid the cost of replacing the carpet and was not responsible for the fact that the client did not like the carpet.



December 2020

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