A case reviewed by the Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) has highlighted the significance of expert evidence for consumers challenging insurance claim decisions.
A homeowner recently obtained an additional $40,000 from her insurer after providing further documentation to support her claim.
The dispute began when “Manaia” (name changed for privacy) filed a claim for damages to her home caused by nearby construction. While her insurer accepted the claim, disagreements arose over the scope of necessary repairs and associated costs.
According to IFSO, the insurer’s initial offer of $11,073.89 was based on findings from two engineering reports that identified foundation movement, minor wall cracks, and sloping floors.
Manaia agreed with the damage assessment but argued that the proposed repair costs underestimated the extent of the work required.
She submitted a builder’s quote totalling $176,525, which significantly exceeded the insurer’s offer. After reviewing this, the insurer raised its settlement to $35,918.77 but rejected several items in the quote, such as consent fees, full replacement of exterior cladding, and subfloor rebuilding, as unnecessary.
Unconvinced, Manaia lodged a complaint with the IFSO Scheme, asserting that the insurer’s revised settlement still did not reflect the true cost of repairs. However, the initial review did not support her claim.
Karen Stevens, Insurance & Financial Services Ombudsman, noted that Manaia’s builder had not provided any reason for the inclusion of the additional repairs. There was sufficient evidence to show that the insurer had missed scope, or that the revised offer was unreasonable. For this reason, Manaia’s complaint was not upheld initially.
Manaia subsequently submitted a second builder’s quote, this time for $52,000. The new evidence aligned more closely with the engineering reports and was accepted by the insurer.
The insurer agreed to settle for the higher amount, and the complaint was resolved.
The IFSO Scheme processed nearly 5,000 enquiries between July 1, 2023, and June 30, 2024, marking a 21% increase from the previous year. Of these, 479 were formal complaints – the highest in the scheme’s nearly 30-year history.
The majority of complaints handled by the IFSO Scheme involved general insurance, including house, contents, and vehicle policies, which accounted for 68% of cases. Health, life, and disability insurance made up 21%, while financial services such as loans and credit represented 11%.
Stevens emphasised the importance of reliable, expert evidence in disputes over insurance claims.
“This case shows just how important having reliable, expert evidence is when something like the scope of works is disputed,” she said.
She noted that under New Zealand’s insurance regulations, claimants are responsible for proving their losses and demonstrating that their claims fall within policy coverage.
“In Manaia’s case, she needed to prove that her insurer’s settlement amount wasn’t adequate, by providing evidence. She was able to do this by providing an alternative quote from a builder, and get her requested settlement amount, which was a good outcome for her,” Stevens said.
