Why homeowner insurance claims get rejected
There’s nothing worse than having your property damaged and being told by your insurer that the repairs are not covered under your policy. Alarmingly, this situation is not unusual, and it could happen to you.
According to the Ombudsman for Short-Term Insurance (OSTI), the number of homeowner complaints during the 2020 financial year came second only to motor vehicle complaints. Despite these surprisingly high numbers, less than 11% of complaints were resolved in favour of the homeowner, the lowest success rate across all categories.
Most homeowner insurance disputes that come before the ombud relate to claims for damage caused by acts of nature, particularly storm-related damage. Pointing to changes in weather patterns, OSTI says it is expecting that catastrophic storm-related claims will become prevalent. The ombud also noted that the primary reason for the rejection of claims was policy exclusions for damage caused by defective design, construction or workmanship, wear and tear, and lack of building maintenance.
As homeowners, it’s important to remember that poor property maintenance often results in acts of nature claims being rejected. For instance, if a tree falls through a wall during a storm, the claim could be rejected if the insurer is able to establish that the wall in question was not in good condition.
OSTI explains: “In general, the ombudsman will assess these matters by asking whether the loss or damage would have occurred if the property had been properly maintained. If it clearly would have occurred even if the property had been adequately maintained, the ombudsman will usually uphold the claim.”
It’s a warning that homeowners should take seriously, particularly when considering that property damage often requires expensive repairs. Making sure that your home is properly maintained will ensure that insurance claims are paid as well as reduce your ongoing property management and maintenance costs.
Contracting a properly qualified assessor to conduct a regular home inspection will give you insight into the health of your property, identify areas of immediate concern and warn of upgrade requirements in the near future. What’s more, the assessment will enable you and your insurance company to right-size your insurance policy, providing you with peace of mind.
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