QUESTION…
A retirement home was built a couple of years ago, and during construction, it would seem that a concrete core that had been cut for drain/sewage was dropped into the system.
When the room was taken into use, a blockage of the grey water system occurred fairly quickly. An issue arose with sewage backing up and flowing through the shower and toilet. It was thought to be the resident putting paper towels into the toilet.
However, three weeks later, the issue arose again and on further investigation a piece of concrete core was discovered in the soil stack. Over time it had likely moved through into the main soil stack.
As the client was proactive, resultant damage was avoided. However, reasonable costs were incurred to find the object in the system and remove, clean and reinstate the system.
Under the MD policy, the insurer agrees to cover the insured for all loss or damage to the property insured during the period of cover due to an event.
An event is defined as: Something that happens including continuous or repeated exposure to substantially the same conditions, or a series of things that happen resulting from, or attributable to one source or original cause, which results in loss or damage.
Loss or damage is defined as: Loss or damage is physical loss of or
damage to the property insured, that is unintended or unforeseen by the insured.
My question is - is the sewage system damaged? The concrete being in the system was accidental, the system was not working as it should due to the concrete core - is that damage? The client has acted very quickly and averted any resultant damage.
The insurer is suggesting that the policy is not triggered as there has been no damage to the pipe and of course there is no resulting damage.
I have also argued that the cost of rectifying the issue should be covered under the Protection Costs clause which reads: This policy extends to cover the insured for any costs reasonably incurred directly resulting from fighting or controlling any event that involves or threatens to involve the property insured.
The insurer has denied under this clause also.
The clauses section under the policy states:
The terms of these clauses attaching to this policy are deemed to be incorporated within the policy. If there is any conflict or inconsistency between the clause, and any other terms of the policy (other than the general exclusions), then the terms of the clause will prevail.
REPLY… CROSSLEY GATES
The insurer is relying on a well-known insurance case in Australia with similar facts, which supports its position. The issue of what amounts to damage has been the subject of many court cases and is a complex area of insurance law.
