TWO EXAMPLES OF REAL-LIFE INSURANCE CLAIMS

Jackie Bougatsas from Wymark Insurance Brokers shares two examples of recent claims made against pest managers, and indicates how these kinds of situations can be avoided.

Allegation 1:	Twelve months after a pre-purchase property and timber pest inspection was completed, the claimant alleged that the report was incomplete and failed to identify the following issues: Rot in cedar doors and windows; Poorly repaired joists below renovated bathroom; Uneven floor joists, possibly due to water damage from leaking guttering; Bee infestation and related damage caused; Stain on paintwork indicating water leaking for some time; Failure to advise recent roof repairs did not comply with BAL regulations.
Amount Originally Claimed:	$32,000
Final Amount Settled:	$0
Third Party Cost i.e. Lawyers/Experts:	$2,200 (defence costs)
Recommendation:	With the aid of lawyers appointed by the inspector’s insurer, the claimant abandoned their allegations and accepted the offer, with each party agreeing to bear their own costs incurred on the basis that: At the time of inspection, the exterior roof surface was on the second storey and some areas of the roof were flat, so inaccessibility was referenced in report. The report also warned of inaccessible areas and noted a ‘high risk of undetected building defects’. Photos to support limited access were included in the report. The report concluded that the property was in fair condition compared to others of a similar age and no major defects or safety issues were identified at the time. Rating for undetected building defects was ‘medium to high’ with recommendations for an invasive inspection required prior to purchase. No sign of bees at the time of inspection. In the pre-inspection agreement – Building and Termite and Timber Pest (Agreement) – bees are considered a ‘general pest’ and are not required to be reported as per Australian Standards. The report outlined that ‘this report is not a warranty or an insurance policy against problems developing with the property in the future. Accordingly, a preventative maintenance program should be implemented which includes systematic inspections, detection and prevention of issues.’ The report did not advise on whether the property complies with current Australian Standards, Building Regulations or other legislative requirements, including BAL regulations.

Allegation 2:	Claimant alleged that the pest manager drilled a hole into the wrong area of the floor resulting in the termite chemical treatment dripping into the bedroom, damaging the wall, ceiling and contents.
Amount Originally Claimed:	$5,450
Final Amount Settled:	$5,450 (cost of repairs and replacement of contents)
Third Party Cost i.e. Lawyers/Experts:	$0
Recommendation:	Pest manager’s liability was difficult to dispute, as admissions of liability/fault were conveyed to the claimant at the time.
Points to Note:	No offers of settlement should be made by the pest manager without their insurer’s consent; Public liability insurance is triggered when a pest manager is held liable by a third party; essentially no insurance coverage is in place until notice of a complaint (written/verbal) made by the third party is received; Photos of damage and quotations for repair costs need to be obtained by the property owner and shared with the insurance company to consider prior to settlement.
Lessons	Ensure the property owner is fully aware that drilling holes may ruin the look of the property Ensure drilling is at acceptable depths and structural integrity is not compromised Review procedure to ensure a similar incident does not occur again.

Jackie Bougatsas, Claims Manager, Wymark Insurance Brokers,