A Happy Ending
I received this email from a broker following up on a question he had asked me a couple of weeks ago.
I spoke with you a couple of weeks ago on this claim scenario relating to a burst water pipe where the client was hit with a $x,000 water bill for the lost water after their pipe burst and damaged their contents/stock. The pipe was burst on their side of the water meter which meant they were subsequently hit with a large water bill.
I thought you would like to know that I was able to successfully argue the claim and the insurer has settled to the client.
Thanks for your feedback and assistance – it was good to be able to bounce the idea off you before I pursued it. My email to the insurer is below.
Luke [surname and email provided]
This is a question that pops up regularly, as does loss of electricity through theft or accident damage.
As explained in the broker’s email to me, based on our discussion, he drafted the following email to the insurer who, on reading the explanation, agreed to meet the claim for the excess water charges. Well done to all concerned.
Hi [claims officer’s name],
Firstly, I would like to point out that you are referencing the wrong policy wording here. I believe the policy wording that applies to this policy according to the schedule is the [insurer’s name, cluster group] Business Pack [policy print code] (s. I’ve attached this wording for your reference. [not attached to this blog posting for privacy reasons] The policy covers loss or damage to property insured as follows:
Page  – ‘Provided the ‘Business property’ cover section is shown in the Policy Schedule as taken, we will cover you up to the sum insured for loss or damage to your property insured at the premises which occurs during the period of insurance.’
Note: The cover section has been taken, the loss occurred at the premises, and it occurred during the period of insurance. You will note the sum insured of $x.x million that applies to the “Contents/Stock” section. Therefore, we need to look at where the “property” is covered.
Page  (Definition of Stock) – (d) any consumable products or materials used in your business
This will include water, electricity, and any other consumable products or materials used in the business. Note there are no property exclusions for any type of stock is included in this definition.
The water bill and loss of water at the premises is NOT a consequential loss, but rather simply a loss of stock as has been suggested. The single event of the burst pipe caused loss & damage to the client, the loss being the loss of water, and the damage being the damage the water caused.
To provide you with all the relevant information, I have reviewed pages  &  and note that there are no event exclusions which would apply to this situation.
I therefore request that you reconsider [insurer’s name]’s position on this matter, and promptly make arrangements to settle this claim in accordance with your basis of settlement provisions noted in the policy.
My suggestion for settlement is as follows:
Water bill being claimed – $x,xxx.xx
Less usual water bill (past 2 water bills $xxx.xx + $xxx.xx divide by 2 = $xxx.xx
Claim payment – $x,xxx.xx less $xxx.xx = $x,xxx.xx (no GST applicable to water)
[surname and email provided]
As with most claims, the way to determine if the loss is covered, as opposed to how it ought or ought not be covered, is to read the words of the contract. Here the broker sought advice, they went and read the actual wording and presented a factual letter to the insurer setting out his position in a non emotional and professional way.
Having received the letter, the underwriter agreed with the logic of the argument and immediately paid the claim, rather than further inconvenience their client.
I am not always advised on the outcome of such matters and it was good of Luke to take the time to write and say thanks.