Common home and contents insurance decline reasons

No Valid Claim

The starting point for any insurance claim is establishing that an insured event occurred. Most policies cover insured events such as storm, fire, flood, theft, and escape of liquid. Many also cover accidental damage as a standard or optional benefit. 

To be accepted, the claimant (you) must first show that an insured event caused the loss or damage you are claiming. 

If there’s no clear event, or if damage existed beforehand, insurers may say a valid claim does not exist. This is often the case with long-term issues, damage discovered incidentally, or deterioration without a triggering event. 

Exclusions

Even if an insured event occurred, claims can still be declined if an exclusion applies. Exclusions usually limit cover for particular causes of damage. These can include: 

Defects and Poor Workmanship

Most policies exclude damage caused by:

• Construction or design defects
• Faulty materials or workmanship
• Structural inadequacies

This might include leaking from failed waterproofing, roof leaks from poor flashing installation, or damage resulting from non-compliant building work. 

Deterioration, Wear and Tear, and Maintenance

These exclusions apply to damage from:

• Ageing materials
• Corrosion, rot or mould over time
• Ongoing exposure to moisture or pests
• Lack of upkeep

Insurers may argue that the damage resulted from ongoing deterioration or failure to upkeep the property (e.g. clearing gutters, repairing cracked roof tiles, resealing joints), rather than a sudden event. 

Atmospheric or Climatic Conditions

Many policies exclude loss from:

• Changes in temperature
• Humidity or condensation

Insurers will often rely on these exclusions where there is evidence of damage related to moisture (for example, mould), without a clear source of moisture. For example, if a property has mould damage, but the claimant cannot determine how or which insured event caused the mould, the insurer may be included to suggest the mould was caused by ongoing conditions, unrelated to any insured event. 

Ground Movement

Damage caused by:

• Soil subsidence
• Heave or settling
• Earth movement from tree roots or moisture

…is often excluded, unless directly caused by an insured event (for example, earthquake or storm-related landslip). This exclusion is commonly used to deny structural cracking claims. 

Openings Not Created by the Storm

Storm claims can also be declined if water entered through an opening not created by a storm. This exclusion is generally designed to exclude damage that could have been easily prevented (i.e., if the homeowner left windows and doors open), but is also used by insurers to decline claims where water entered via weaknesses in the building’s envelope (e.g., cracked roof tiles). 

Gradual Leak

Escape of liquid sections often exclude damage caused by slow or continuous leaks. If the leak wasn’t sudden, or there was a reasonable possibility of the leak being fixed before it was, the insurer may say the damage is excluded. 

Disclosure Issues

At the start of a policy, during renewal, you’re required to take reasonable care not to make a misrepresentation. This includes giving accurate answers to insurer questions. You’re also expected to keep the insurer up to date about things during the policy period (your PDS will outline what). 

Insurers may decline claims where they believe you failed to disclose something material or answered incorrectly. 

“Good Condition” Questions

Insurers often ask if your home is in “good condition”. However, if you answer yes, and later claim for damage linked to a known issue (e.g. rusted roof, leaking shower, unrepaired cracks), they may allege misrepresentation and deny the claim. 

Unoccupied Homes

Policies may reduce or exclude cover if the home is unoccupied for more than a certain number of consecutive days, as this increases the risk of events like theft or the possibility of significant damage (e.g., from a fire). If you were travelling, selling, renovating or in hospital, and didn’t notify the insurer, they may argue you failed to disclose to them important information which would have affected their decision to offer or continue your cover. 

Fraud

Where insurers believe the claim has been made dishonestly or with false information, they may allege fraud and decline the claim entirely.

This is more likely with:

• Fires with suspicious origins
• Alleged staged thefts
• Inflated or falsified contents claims