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online technical resource

household insurance: accidental damage

This section of our website describes our approach to complaints involving accidental damage to items covered by household buildings or contents insurance.

overview

Accidental damage cover is usually sold as an optional add-on to standard household insurance policies. Insurers often say it is designed to insure the policyholder's possessions against damage caused by acts of negligence - for example, spillages and breakages in the home.

The complaints that we see usually come about when a claim is refused, because the insurer has said that:

  • the damage was not accidental;
  • the policy did not cover what had happened; or
  • the policyholder was not covered for accidental damage at all.

We sometimes see complaints where neither the insurer nor the policyholder has mentioned accidental damage cover. For example, the insurer may have rejected a claim on a buildings insurance policy for damage caused by a storm to the policyholder's house and items inside - and neither side has taken into account the fact that the policyholder had bought additional accidental damage cover.

So we are always careful to examine the extent of the cover that the policyholder had bought. If it seems that the insurer has not taken into account the fact that the policyholder had taken out additional cover, we may ask them to re-consider the claim.

what is "accidental damage"?

If a policy does not define what it means by "accidental damage", we normally apply ordinary, everyday meanings.

We generally consider "accidental" to mean something that is both unforeseen and unintentional. And we usually say that a reasonable interpretation of the word "damage" includes not only physical damage to an item but also something that resulted in a "loss of function" - in other words, something that left it unable to perform the task it was designed to do.

For example, we might say that a blocked drain could be considered as damaged - even if there was no physical breakage or visible "trauma" - because the drain could not do what it was supposed to.

Some policies define what they mean by "accidental damage". Typically, the definition says that for damage to be considered accidental, it must be sudden and as a result of an external, visible and violent cause.

Where a policy defines what is meant by "accidental damage", we look at how the definition was communicated to the policyholder. We are likely to uphold a complaint about a claim being rejected if we find that:

  • the policy defined "accidental damage" as something significantly different to the ordinary meaning of the words;
  • the policyholder's attention was not adequately drawn to the unusual definition; and
  • the policyholder would probably have acted differently - and been in a better position as a result - if the definition had not been significantly different to the ordinary meaning.

We are likely to be satisfied that a definition of "accidental damage" was brought to the attention of the policyholder, if it was:

  • written in plain and intelligible language; and
  • given some prominence when the policy was sold (or whenever the definition was introduced).

So if an unusual definition was mentioned only in a policy document or in the renewal literature, we are unlikely to say that this was enough to bring it to the policyholder's attention.

what was covered by the policy?

Accidental damage cover might exclude damage caused by:

  • wear and tear;
  • the gradual deterioration of something with age;
  • wilful or deliberate acts;
  • defective workmanship.

Where there is a dispute about how something was damaged, we consider the individual circumstances of the case - including how the cover was defined in the policy.

For example, where furniture was damaged by leaking pipes hidden behind a bath on the floor above, we are likely to say that this was accidental - because the policyholder could not reasonably have foreseen the damage or done anything about it.

Where the insurer has refused to pay a claim because of an exclusion in the policy, we will consider whether the exclusion was significant or unusual. If we find that it was, we will look at how the exclusion was communicated to the policyholder.

We are likely to uphold a complaint about a claim being rejected if we find that:

  • the policyholder's attention was not adequately drawn to the exclusion; and
  • the policyholder would probably have acted differently on being told about the exclusion - and would have been in a better position as a result.

We are likely to be satisfied that an exclusion was brought to the attention of the policyholder, if it was:

  • written in plain and intelligible language; and
  • given some prominence when the policy was sold (or whenever the exclusion was introduced).

So if a significant or unusual exclusion was mentioned only in a policy document or in the renewal literature, we are unlikely to say that this was enough to bring it to the policyholder's attention.

Insurers sometimes include a large number of exclusions, which can significantly reduce the cover provided. Where we see a complaint about a claim being rejected in these circumstances, we will consider whether the limited extent of cover was adequately brought to the policyholder's attention.

Some insurers offer more expensive "all risks" policies that cover any type of damage that is not specified in the policy terms. If we see a complaint about an insurer refusing to pay a claim because of something excluded in one of these policies, we will consider:

  • how clearly worded the exclusion was;
  • how significant it was; and
  • whether it was adequately brought to the attention of the policyholder when they took the policy out.

compensation

If we are satisfied that a claim should not have been rejected, we will usually tell the insurer to pay it.

We may also say that the insurer should pay an additional amount, to take account of the fact that the policyholder should have been paid the money sooner. There is more information about this in the section of our website on compensation for being "deprived" of money and for investment loss.

We may also consider telling the business to pay compensation to the policyholder for distress and inconvenience. There is more information about this in our technical note on compensation for distress, inconvenience or other non-financial loss.

help for businesses and consumer advisers

contact our technical advice desk on 020 7964 1400

This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.

image: spill on carpet
  • The law requires us to decide each case on the basis of our existing powers and what is fair in the circumstances of that particular case.
    We take into account the law, regulators' rules and guidance, relevant codes and good industry practice at the relevant time.
    We do not have power to make rules for financial businesses.
    Our current approach may develop in the light of circumstances disclosed by further cases we receive.
    We may decide that fairness requires a different approach in a particular case.