A homeowner who fell through a bathroom floor discovered that finding damage suddenly does not make it a sudden event in the eyes of insurers — and the gap between expectation and policy coverage is catching more people out.
A New Zealand man who stepped out of his shower and fell through his bathroom floor recently discovered a hard truth about home insurance: discovering damage suddenly is not the same as the damage having occurred suddenly.
The man found significant water damage under the tiles and floor of his bathroom and made a claim. While his insurer accepted there had been a leak, it said the damage had not happened all at once — and because it had developed over time, the claim was capped at the policy's gradual damage benefit, typically between $2,000 and $5,000, as RNZ reported.
He argued that MDF flooring would have broken down quickly once water penetrated it, suggesting the damage must have been sudden. He took his complaint to the Insurance and Financial Services Ombudsman (IFSO), which found the insurer had correctly applied its policy, per RNZ's separate reporting on IFSO disputes and travel insurance cases. Evidence including mould that would have taken time to develop showed the leak had been present for an extended period. The ombudsman said that, under the policy's main terms, damage had to occur "instantly or at all once" to qualify for full cover.
A growing problem
The IFSO's figures show 6 percent of disputes accepted for investigation this financial year related to gradual damage, up from 5 percent the prior year. Ombudsman Karen Stevens said it had been among the top five complaint categories for two years running. "The key issue is the gap between what people expect and what policies cover," Stevens said. "Insurance only covers sudden damage, not damage that occurs over time and may have been discovered suddenly. It is the cause of the damage, rather than its discovery, that has to be sudden."
The 72-hour rule is a common reference point: insurers typically treat any damage occurring outside a 72-hour window as gradual. Stevens also noted that internal guttering can make hidden leaks harder to spot and cause serious damage before a homeowner is aware there is a problem.
What homeowners should know
The case illustrates several points worth understanding. First, standard home insurance policies distinguish between sudden, identifiable events and damage that accumulates over time — even if you only notice the result of that damage suddenly. Second, leaving a leak unresolved can compound the problem: once damage is deemed gradual, most policies will not pay out the full cost of repairs. Third, if you are disputing a claim decision, an expert's report on causation can be critical in resolving the dispute, particularly where there is ambiguity about when the damage occurred.
The case is a reminder to check your policy's gradual damage limit and to address any water leaks promptly, however minor they seem.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.