Water leak causes property damage

This case study shows an example of how we helped a customer with a water leak. Personal information about our customers has been changed to protect their privacy.

Mr Kovac contacted his water provider after a water-main burst, causing significant damage to his driveway, a retaining wall, garden and the contents in his garage. He submitted a claim to his provider of $98,474.

The water provider was aware of a previous leak in the area reported by a neighbour’s plumber and had attended the site twice but was unable to identify the location of the leak.

The provider engaged an independent loss assessor to inspect the premises and identify damaged areas that were uninsured. Without accepting liability, the provider offered a settlement of $54,085 as a goodwill gesture based on repair quotes, and referred Mr Kovac to his home insurer for the damaged garage contents. Mr Kovac accepted the $54,085 but did not wish to claim the rest via insurance so he contacted EWON to review the provider’s denial of his contents claim.

He said several of his neighbours and his neighbour’s plumber had reported the leak earlier. However, he believed the burst occurred because the provider had increased the water pressure as part of its inspection work. He argued that the provider’s agreement to pay the $54,085 proved its liability.

The provider’s records confirmed the leak was reported two weeks before the main burst and it had attended the site on the same day but could not find the reason for the leak. The provider visited again the day before the main burst but still could not locate the leak.

EWON’s review of the provider’s customer contract and insurance claims management procedure noted that Mr Kovac was required to claim through his insurer first. The provider was liable only if it could be reasonably proved that its actions or inactions had caused the water main to burst, given its knowledge under the circumstances.

Our investigation concluded that the provider could not have reasonably foreseen or prevented the burst and that its goodwill decision to pay part of the claim did not prove liability. We asked Mr Kovac to prove the value of his claim but he could not.

We found there were insufficient grounds for further investigation and recommended Mr Kovac claim through his home and contents insurance. We advised that his provider would contribute to the insurance excess and no claims bonus as a goodwill gesture, if the insurer honoured the claim. We advised him that if he believed his insurer had not honoured the terms of his insurance policy, he could contact the Australian Financial Complaints Authority.