Tribunal says carpet should be covered
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.