Home insurance doesn't cover wear and tear – you'll find it listed under 'general exclusions' in all product disclosure statements (PDS). However, if your insurer rejects your claim because they think the damage is due to wear and tear and you disagree, you can dispute the decision.
Does home insurance cover wear and tear?
Wear and tear is generally excluded from home insurance policies because it's deemed inevitable. That's because insurance is there to protect you from unforeseeable damage and losses like storms, floods and other accidents.
Parts of your home, on the other hand, will inevitably deteriorate over time. It's therefore your job to make sure they are properly looked after – not your insurers.
For example, if a storm or flood were to severely damage your old, deteriorating roof, your insurer is likely to deny any claim made due to wear and tear. The argument is that in order to be eligible for home insurance protection, you must properly maintain, repair and replace any defective area of your home (the insured property).
What is wear and tear in home insurance?
Wear and tear includes damage to anything you have not maintained properly. It can include anything from gradual deterioration, rust and corrosion to deterioration from exposure to light. Common exclusions related to wear and tear in home insurance can include:
- Poor maintenance
- Prior damage that hasn't been mended
- Manufacturing defects or faulty installation
- Deteriorating parts
My home insurer thinks my damage is due to wear and tear but I disagree. What should I do?
If your home insurer rejects a claim you've made because of "wear and tear", you can ask that your case to be reviewed. All insurance companies need to have their own internal dispute resolution system. To help resolve the dispute in your favour, the following evidence can help:
- Evidence showing that the damage was caused by an event that is covered by your policy.
- Evidence of regular maintenance work and inspections.
If, after an internal review, you're still not happy with your insurer's decision, you can take your claim through the approved external dispute resolution process. The Australian Financial Complaints Authority will then review your claim and make a decision. If this still doesn't go in your favour, you might want to seek legal help.
Ways to minimise wear and tear in your house
To minimise wear and tear in your house, there are a few things you can do.
- Address any plumbing issues. Dripping taps and leaking pipes can cause a build-up of mould, damage floors or lead to more serious problems like a burst pipe. The sooner you address the problem, the better your chances are of avoiding wear and tear.
- Have regular inspections. Regular inspections of the property will quickly reveal any areas where work needs to be done. Make sure to include roof inspections in particular and keep records of the inspection.
- Keep on top of maintenance. To help prevent steam and mould damage, make sure the bathroom is well ventilated. Think about installing a fan that automatically comes on when you switch the light on. Other areas worth regularly cleaning include the gutters and any other outdoor pipes.
Damage from wear and tear around the home isn't really covered by home insurance. But since you're here, is it a good time for you to review your current home insurance policy?
Comparing different policies can help make sure you're getting the best cover for your dollar.
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