Across the Claims Desk

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Offbeat, unusual claims that cross insurers desk‘s everyday!

SPLASH OF PAINT

Unrestrained items in the back of a vehicle can cause more damage than a collision. The claimant driver of a car had a minor collision resulting in tins of paint on the back seat moving freely around the inside of the vehicle, flipping their lids and coating the upholstery with an attractive but unwanted colour scheme. The cost of replacement of the interior resulted in the car being uneconomical to repair.

Outcome: Car written off. Claim accepted.

PLASTERED!

Dinner at home was an interesting occasion for one family when parts of the ceiling fell in on them. It seems that the glue holding the plasterboard ceilings in their older home did not have a lifetime serviceability.

When their house was built, ceilings were held in place by both screws and glue and if there was a shortage of screws, the ceiling fixing would rely on the glue, which can deteriorate over time.

Generally, unless there has been a contributing factor e.g. water ingress, these repairs tend to be excluded under ‘wear and tear’ gradual deterioration exclusions.

Outcome: Claim rejected.

UNBROKEN… BUT REPLACED ANYWAY

With the recent replacement of many hail damaged roofs in the Brisbane area, it is interesting to note that whilst many solar panels survived the impact of the hail, some had to be replaced anyway because were not fire rated.

Outcome: Claim accepted.

New Rating System for Homes at Risk

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New rating system launched

Following the ‘Black Saturday’ and ‘Blue Mountains’ bushfires in recent years, the Australian Government in conjunction with local councils and fire services, has amended the requirements set out in Australian Standard 3959 – Construction of Buildings in Bushfire Prone Areas.

A Bushfire Attack Level (commonly known as BAL) Rating has now been applied to all domestic buildings located within 100 metres of bushland vegetation.

The BAL Ratings that have been assigned (from lowest to highest) are:

1. BAL – LOW

2. BAL – 12.5

3. BAL – 19

4. BAL – 29

5. BAL – 40

6. BAL – FZ (Flame Zone)

These ratings are based on factors such as the region where you live, the vegetation type around your property, the distance from your home to individual vegetation types, and the slope of the property.

This means that if your property now has a BAL Rating applied to it, then the costs to repair or rebuild your property have increased, sometimes dramatically, to now comply with the new amended Australia Standard laws. The additional costs are not strictly limited to fire damage only, but also apply to all claims affecting the external components of the building such as roof, walls, gutters, eaves, windows, doors, decks etc. So if your property suffers damage through events such storm, hail, impact, accidental damage etc. then the repair costs will be impacted by the BAL Rating.

So what does this mean for insurance? Depending on the BAL Rating applicable to your property, the additional costs associated with the rectification of damage caused to your property, be it by fire, storm, impact, etc. need to be included within your Building Sum Insured and not be exhausted under your insurance policy.

The Building Sum Insured nominated on your insurance policy now needs to be increased to include these additional costs otherwise it will result in under-insurance leaving you with either an unfinished home or personal financial contribution (outside insurance) to complete the repair or rebuild of your property.

The recommended additional costs have been set at:

1. BAL – LOW
No additional cost

2. BAL – 12.5
Additional $5,000 – $15,000

3. BAL – 19
Additional $20,000 – $30,000

4. BAL – 29
Additional $30,000 – $50,000

5. BAL – 40
Additional $50,000 – $80,000

6. BAL – FZ (Flame Zone)
Additional $100,000 – $120,000

In order to determine the BAL Rating applicable to your property, please contact your local council who will be able to provide you with this information. Once obtained, a calculation can be provided for the average additional costs that should be included in your building sum insured and added to your insurance policy to ensure you are adequately protected in the event of a loss.

If you would like more information regarding BAL Ratings, please contact your CQIB broker. 

Pollution Liability Insurance

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A Must-Have For Many Businesses

Many business owners are unaware their standard business package insurance will not cover pollution remediation. It’s likely that contractors and other professionals working on major infrastructure and construction projects will have appropriate cover, but the cover is not just for heavy industry. Businesses with high risk include dry cleaners and hair salons due to chemicals they store and use. Service stations are vulnerable because of the potential leakage from underground storage tanks and pipes corroding over time.

Recently there was a $300,000 clean-up claim from a contractor that had serviced pipes at a petrol station. An explosion at a sewerage plant, some kilometres away, was traced back to the service station, and it was discovered that pollutants had flowed into the water table.

Pollution incidents are not confined to heavy industrial sites, they can also be caused by small businesses or individuals such as contractors or subcontractors – for example, due to a failure to install proper sediment controls while undertaking earthworks.

Independent contractors need to protect themselves against any claims of damage caused by the work they do or have done. One type of cover that may be suitable is pollution liability insurance. This cover protects an entity against liability from damage caused by hazardous waste materials. The reality is that environmental clean-up projects can cost millions of dollars.

It’s too late to buy cover if you cause an incident and you should be aware that pollution liability is not covered under a general liability policy. Some policies may provide coverage only for sudden and accidental events, but exclude gradual pollution events and the cover may specifically exclude clean-up costs.

Mould, Legionella, noise and odour are also considered pollutions and may be covered by an environmental insurance policy.

If you think you may have a risk of hazardous waste exposure in your business operations, it is a good idea to consult with your insurance broker about the need for pollution liability insurance.

Underinsurance

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Weather Events Demand a Closer Look

Following on from the previous article in the last edition of Brokerwise, we continue to focus on the impact of Co-Insurance or “Underinsurance” as it is more commonly known.

The importance of considering and selecting appropriate and adequate Insurance Policy Limits or sub limits of liability are paramount and should always take into account any possible ‘Underinsurance’ potential impact.

The latest weather perils that have impacted Queensland and Australia generally over the past few months highlight the need to look at various points that require consideration. These are:

  1. Current relevant Laws
  2. Replacement Material Costs
  3. Removal of Debris.

Point 1: There have now been changes to both State and Federal Laws regarding the required ‘wind rating’ of roller doors used in commercial buildings. Following the various cyclones and storms, insured clients discovered that because they had ‘old’ roller doors that didn’t comply with the new building laws, they didn’t have an adequate sum insured to pay for replacement with new ‘legally compliant’ doors.

Point 2: Both local and imported building materials have risen in cost due to demand after the various weather events. As such, insured clients have experienced first hand the impact of not ‘setting’ an adequate Sum Insured only to find that they were sometimes grossly underinsured, and as such, had claim payments and settlements considerably reduced. Consideration also needs to be given to both the a) extra time and b) extra costs related to imported materials.

Point 3: In this scenario, the Removal of Debris limit becomes applicable. As there are many buildings that still have varying degrees of asbestos sheeting or materials as part of their overall construction there is large cost associated with both the a) removal of debris (following an Insured loss) and b) the replacement of the damaged area. Further, there can be a ‘flow on’ effect where Increased Cost of Working Policy sub limits may also be required to be utilised following this kind of loss.

Your insurance broker can advise on policy coverage and adequate Limits of Liability required for your circumstances. Following your broker’s advice will result in better outcomes during the claims process.

Disaster Recovery

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There’s No Quick Fix

The Brisbane hailstorm event of late November 2014 led to more than 102,300 claims worth $1.08billion. The storm caused extensive damage to homes, businesses and vehicles as it ripped through the city at rush hour.

The event may have slipped from front-of-mind position for many of us but there is a stark reminder in the number of Brisbane houses still displaying tarpaulins and boarded up windows. The relative slowness of repair and recovery is testament to the storm’s severity. Even now, 3 months on, indications are that for many property owners, full recovery still has a long way to go.

The delay is not the fault of the insurers whose claims teams swung into action even before the hailstorm ice had melted. In fact, recent reports by CQIB members citywide have confirmed and applauded the speedy response by insurers to the avalanche of claims they received.

The problem is one of materials and labour – supply and demand. With so much damage and destruction following a major storm event, large numbers of tradesmen of all kinds are needed together with massive amounts of building materials.

For the owner of damaged property, the to-do list is long: finding tradesmen, obtaining quotes, scheduling repair work… all subject to availability of manpower and the necessary building supplies.

One industry provides an insight into the size of the problem – glass replacement.

O’Brien Glass reported that they have over 5000 repair customers to service and just 2 weeks after the storm had already replaced over 1900 glass panels out of an estimated total of 20,000. Adding to the O’Brien workload was the high number of older “Queenslander” style homes, often with high, above the ground wooden window frames requiring multiple glass panels, many of them unusual or colored glass not readily available and difficult to source.

Building industry trades of all descriptions experienced similar manpower and materials shortages. Motor vehicle insurers brought in interstate assessors to help handle the workload and one tow-truck operator collected over 600 storm-wrecked cars before Christmas.

It’s expected that owners of the more seriously damaged buildings may be waiting up to 18 months before they can re-occupy their premises.

Whether you escaped the November 2014 storm event or your property received major or minor damage, there’s no doubt the best defence is to have adequate insurance.

Review your policy to be sure the cover meets your expectations and the sums insured are enough to make things right if your property is in its path when the next storm hits.

Household workers need cover too

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Do you have a regular gardener or cleaner at your home or holiday home? Or maybe you have a paid child-minder at your residence on your social nights out? Have you considered if you require Household Worker Insurance?

If you have paid help at your domestic residence, Household Worker Insurance is critical. A single work-related accident can leave you, the employer, liable for thousands of dollars in medical bills. Even worse, it could lead to a common law claim, which could involve a lump sum payment for loss of future earnings, pain and suffering, permanent impairment etc., which could amount to millions of dollars.

Don’t assume you have domestic worker protection under your home and contents policy.

Under the Household Worker Insurance policy offered by WorkCover Queensland, you are covered for the cost of compensating a household worker in your employ who sustains a work-related injury while working for you. These costs may include lost wages, travelling expenses, hospital, medical and rehabilitation expenses and other associated costs.

The policy is only $50 for a two-year term. For more details head to the WorkCover Queensland website or contact your insurance broker.

 

Fire doesn’t discriminate

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As the chills start settling in, we all need to be conscious of the winter fire season. Every year people die as a result of fires in the home. Statistics show the majority of house fires occur at night when people are asleep. Most are preventable.

In a fire, you may only have a few minutes from the sounding of the smoke alarm to when your life is seriously threatened by fire or smoke.  It makes sense to prepare for the worst by practicing an escape plan, making sure that everyone knows what the smoke alarm sounds like, and that everyone in the household knows what to do in an emergency

When you go to sleep, your sense of smell also goes to sleep. If there is a fire, toxic fumes may overcome you before you wake up. The piercing shriek of a smoke alarm can provide the seconds and minutes of valuable time you need to get out of the house during a fire. Think about…

  • Installing an adequate number of suitable smoke alarms and testing them regularly.
  • Having a written escape plan in case of a fire and practicing it.
  • Never leave cooking or any other open flame including candles or oil burners unattended.
  • Make sure keys to all locked doors are readily accessible in case you need to escape.
  • In the colder months, take extra care when using heaters, electric blankets or open fires.
  • Portable heaters should always be placed in a stable position, and a safe distance away from bedding, clothing, curtains and tablecloths.
  • Always keep lighters and matches away from children.
  • Regularly clean your clothes dryer. Clean the lint out from the filter in the dryer.
  • Oil, gas or wood heating units may require a yearly maintenance check.

All homes have different requirements so if you’re not sure, look into the free Safehome service, a program whereby you can invite local firefighters to assist with your fire and home safety needs. This initiative is free service provided by Queensland Fire & Rescue Service in the interest of developing a safer community. Contact 13 74 68 for more details or visit the website.

Your home and everything you treasure deserves proper protection. In addition to having safety practices in place, be sure to speak to your insurance broker who can provide you with the right insurance solution for home and contents, ensuring your peace of mind.

https://www.fire.qld.gov.au/communitysafety/freeprograms/safehome.asp