The Insurance & Financial Services Ombudsman Office has been able to arrange a settlement of a complaint between an insured and insurer over construction of a swimming pool and the insured’s house.

The insured took out construction insurance for the pool to be built.  During construction the excavation collapsed, causing damage to the boundary fence and also to the neighbour’s property.

The insurer declined to pay for the claim for the neighbour’s land and fence because the policy did not cover third party property.  It also declined to cover the cost of supporting the excavation because of an exclusion in the policy that did not cover defective workmanship.

An independent expert considered the claim and advised the Insurance Ombudsman that a plastic cover to protect the excavations would have been standard practice.  As a result the insurer was entitled to rely on the exclusion for defective workmanship.

However, the case had a happy ending because the insured also had cover for his house with the same insurer and the Case Manager managed to arrange a settlement whereby the insurer accepted the claim under the house policy and paid out for the excavations and the damage to the neighbour’s fence and land.

In this case the value of having your insurances with the same insurer meant there was no argument between insurers as to who was liable for what damage.

Alan Knowsley
Insurance Lawyer Wellington