Tri­bunal says car­pet should be cov­ered

Auckland City Harbour News - - NEWS -

Here’s one from the files of the to­tally un­rea­son­able. A cou­ple bought house in­sur­ance. They’d made a de­lib­er­ate de­ci­sion not to have con­tents cover, tak­ing the risk of things like bur­glary on to them­selves.

Given what’s hap­pened to house and con­tents pre­mi­ums it’s an un­der­stand­able de­ci­sion. In April last year there was se­vere rain­fall and flood wa­ter poured into their home, dam­ag­ing the walls and car­pet. The cost of re­pair­ing the walls was cov­ered un­der the house pol­icy but their in­surer re­fused to pay for a new car­pet, say­ing the car­pet was not a per­ma­nent fix­ture.

Yes, it was tacked into place as car­pets gen­er­ally are, but here’s the clever bit, the in­surer didn’t con­sider it was ‘‘per­ma­nently fixed’’ into place be­cause it was ca­pa­ble of be­ing re­moved with­out dam­age.

And its pol­icy only cov­ered the ‘‘House’’, and its fix­tures and fit­tings (other than floor cov­er­ings not per­ma­nently fixed or glued in place, drapes and blinds).

It had clev­erly rein­vented the cover it had sold and saved it­self $6500.

A bit weasel­ish, I think you will agree, and a line of think­ing the in­surer could have taken fur­ther. Af­ter all, you can re­move a door with­out dam­age to it too. Or a fire­place sur­round. Or a win­dow frame. Does that mean they wouldn’t have been cov­ered too?

We only know about this case be­cause the disgusted cou­ple took their claim to the lawyer-free dis­putes tri­bunal and won. Pub­li­cis­ing cases like this is im­por­tant as it shows how the lit­tle guy can take on the big one and win when the big guy has failed to live up to its side of a con­tract.

It’s only been in re­cent months that the tri­bunal has both­ered to pub­lish de­ci­sions like this and that was af­ter a good telling off in the me­dia and a rocket sent its way by the min­is­ter of jus­tice con­cerned jus­tice paid for by the tax­payer was not be­ing seen to be done. The tri­bunal ref­eree gave the in­surer a good tick­ing.

‘‘It seems to me that the ordinary per­son would con­sider car­pet fas­tened to the floor via tacked straight edges to be per­ma­nently fixed,’’ ref­eree Tun­ni­cliffe said.

Hear, hear! It seems to me the in­surer would be in dan­ger of hav­ing breached the Fair Trad­ing Act for mis­rep­re­sent­ing the cover it was sell­ing, if it re­ally sold house cover be­liev­ing tacked down car­pets were not cov­ered.

In­deed, Tun­ni­cliffe said the in­surer had an obli­ga­tion to be clear and ‘‘the law is that any am­bi­gu­ity in a con­tract be in­ter­preted against the party who drafted the con­tract’’. At the mo­ment the In­sur­ance Coun­cil is work­ing on re­work­ing its Fair In­sur­ance Code. It should not be silent on this is­sue.

Where a term is not clearly de­fined, the ordinary un­der­stand­ing of the term should guide claims de­ci­sions.

It’s a vol­un­tary code, so don’t hold your breath.

And who was the in­surer do­ing its bit to con­firm the public per­cep­tion of an in­dus­try with a tainted rep­u­ta­tion? I don’t know. Dis­pute Tri­bunal rul­ings re­move names. It could be yours.

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