QUESTION
Our client lives overseas and has a rental property in New Zealand. Following receiving a water bill from TDC for over $14,000 it was discovered there was a leak in the pipe leading from the mains down the driveway to the house. When the plumber attended it was decided that it would have been too difficult/costly to dig up the driveway to locate the leak in the existing pipe so they just laid a new one and redirected the water supply down this pipe. The bill for plumbing services is approx. $8,000, and the client is claiming the cost of the water and the plumbing bill.
The insurer determined there was no cover as the leak was likely gradual and there was no evidence of sudden or accidental damage. Client was not satisfied with this response, and at this point, came to us for assistance.
I called the plumber who attended the job and his opinion was that the leak was almost certainly occurred suddenly. I contacted this expert opinion (over 30 years' experience) and questioned how they could decline a claim, citing that sudden damage could not be proved when the opposite was also true, gradual damage could also not be proved. I also suggested that if the response was grey, then the policy wording should find in favour of the client.
The insurer had their internal LA’s review, and they came back with the same response.
I have advised the client of what steps I have taken and what the outcome is, but he is still extremely dissatisfied and has asked me to get the insurer to review again. Before I send him the complaints process, I just wanted to get your experienced opinions as to whether there is anything else we could do to change the insurer's stance. I feel it is unfair that the insurer gets to argue sudden damage can’t be proved when they also can’t prove it was gradual.
Thoughts?
EXPERT ANSWER: Emma Gabor - Gabor Law
An insurance policy is like a house. To get entry into the policy, you need to get through the front door, which is the main insuring clause. The burden of proof to get into the house is on the insured. Once the insured is in "the house" (in the policy), the burden of proof shifts to the insurer if they want to apply an exclusion.
In this case, the insured is not in the house yet, so the insurer does not need to do anything. It is on the homeowner to prove that they meet the insuring clause, ie that they suffered sudden and accidental damage. If they can't show that they meet the criteria, they can't get through the front door of the policy.
It is not on the insurer to prove that the damage did not occur in a particular way. The Courts have recently clarified the position on the burden of proof in Moorehouse v Vero [2024] NZCA 415 and Body Corporate 423090 v QBE Insurance (International) Ltd [2025] NZHC 3015.
If there was any sudden event that could explain the damage to the pipe - such as an earthquake, or a landslip nearby, or some work at the property that involved heavy machinery - that could be used to argue a prima facie case of a sudden event. That might shift the burden of proof on the insurer. But in the absence of such, the burden remains with the homeowner to show that they meet the conditions of cover in the main insuring clause. It's not easy with buried services. Hopefully, there was more than just gradual deterioration, and the homeowner is able to find the source of the problem.
