A Queensland landlord has learned a difficult lesson after their claim for damage to a holiday unit was declined, following the death of a tenant at the property.
The landlord held a policy with Suncorp, which covered investor home and contents. Unfortunately, the death of the tenant went unnoticed for some time, and the deceased’s decomposing body caused significant damage to the property, so much that the landlord claimed it as a total loss.
The Queensland Police ruled the death as “undetermined”. The landlord believed that both murder and suicide couldn’t be ruled out and that the insurance policy should cover the damage under the “vandalism and malicious damage by tenants or their guests” section of the policy.
Suncorp disagreed, saying the death of the tenant was accidental, and the landlord’s insurance broker had not included optional accidental cover.
The Australian Financial Complaints Authority ruled that the damage to the property wasn’t covered under the landlord’s policy. They found that Suncorp had acted reasonably and fairly in their assessment of the claim.
“There is no doubt that the insured has suffered trauma and has had to deal with a horrible situation by virtue of the nature of the circumstances which have given rise to the claim,” AFCA said.
“The available information suggests the tenant died of natural causes and the damage to the property that followed was accidental in that it was unintended and unexpected.
“The only way the policy would cover the damage suffered by the complainant is the optional cover for ‘accidental damage’. As this option was not taken by the complainant, the insurer is entitled to decline the claim.”
The AFCA explained that the notion that the claim should be covered under the theft or vandalism section of the policy “could not be sustained”.
The broker did not include the accidental damage option and believed it wasn’t available to protect against this type of risk. Suncorp explained that accidental damage was an available option, and the PDS included the option.
“It is unclear why the broker would not have thought this was available,” AFCA said. “The certificate of insurance clearly states that optional accidental cover was not selected. There would have been the opportunity to select this on renewal of the policy.”
The landlord submitted a document that stated Suncorp had removed the opportunity to include the optional cover for accidental damage.
“If this is the case, the precise circumstances by which this happened are unclear. In any event, this was plainly a matter on which the broker was available to give advice as to alternative policies available in the marketplace,” AFCA said.
The significant damage to the unit was the result of the decomposition of the body of the tenant, and the landlord argued that the damage should be covered under the policy. The AFCA disagreed, explaining that for the policy to hold up, the damage would need to have been the result of theft.
“This section of the policy does not apply,” it said. “The complainant has not established an insured event has occurred, and the insurer is entitled to decline the claim on this basis.”
AFCA also turned down a claim for compensation for inconvenience, terming the conduct of Suncorp as reasonable and never misleading.
The case highlights the limitations of landlord policies and the importance of accidental damage being included to protect the asset from worst case scenarios.