Woman Gets $40k More After Disputing Insurer’s Decision

The Insurance & Financial Services Ombudsman Scheme says that expert evidence is often key for consumers who want to challenge their insurers on claim decisions or settlement amounts.

In a recent case investigated by the Insurance & Financial Services Ombudsman Scheme (IFSO Scheme), a woman provided evidence that her insurer hadn’t properly estimated the cost of repairs required for her house. As a result, the insurer agreed to pay her $40k more than it initially offered.

Manaia* made an insurance claim for damage to her house caused by her neighbour’s construction work. Her insurer accepted the claim, but a disagreement arose over the cost and scope of repairs.

The insurer based the estimated repair cost on two engineering reports, which identified foundation displacement, minor wall cracks, and sloping floors. The insurer offered Manaia $11,073.89 based on these findings. Manaia agreed with the damage outlined in the engineering reports, but didn’t think the insurer had captured all the work required to repair the damage, or accurately estimated the cost of repairs.

Manaia submitted her own quote from a builder for the repairs, which came to $176,525. After reviewing this, the insurer raised its offer to $35,918.77, but maintained that some items listed on Manaia’s quote were unnecessary, such as consent fees, replacement of all exterior cladding, rebuilding the subfloor, and other items.

Manaia made a complaint to the IFSO Scheme. Initially her complaint wasn’t successful.

“Manaia’s builder hadn’t provided any reasoning for the inclusion of the additional repairs. There was insufficient evidence to show that the insurer had missed scope, or that the revised offer was unreasonable. For this reason, Manaia’s complaint was not upheld initially,” says Stevens.

However, after asking for a review, Manaia provided another builder’s quote, this time totalling $52,000. The insurer reviewed this quote and agreed that the scope of works was more in line with the engineer’s recommendations. The insurer agreed to pay Manaia her requested settlement amount. She accepted this offer, and the complaint was resolved.

“This case shows just how important having reliable, expert evidence is when something like the scope of works is disputed. The law says that when someone makes an insurance claim, it is up to them to prove they have suffered a loss, which is covered by the policy. In Manaia’s case, she needed to prove that her insurer’s settlement amount wasn’t adequate, by providing evidence. She was able to do this by providing an alternative quote from a builder, and get her requested settlement amount, which was a good outcome for her,” says Stevens.

The IFSO Scheme resolves complaints about insurance and financial services, and is independent, fair, and free for consumers. People can make a complaint to the IFSO Scheme at www.ifso.nz or by calling 0800 888 202.

* Name has been changed.

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