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Leaks, Household Insurance Policies and Inter

Owens McCarthy are Ireland's leading firm of Public Loss Assessors and Claim Consultants, delivering bespoke claim solutions through our Nationwide office network.

Press reports of 31 March indicate that Irish Water have identified circa 30,000 leaks at the household/customer side of the water infrastructure. It has been speculated that many of these leaks are from faulty cisterns and the like and, as such, should be easy to remedy.

However, a more serious and complicated outcome can arise where a leaking mains water or supply is located beneath the floors at a property.

Household policies of insurance do not provide cover in respect of the cost of replacing defective or faulty plumbing. Such costs must be borne by the Policyholder.

Homeowners can be exposed to significant costs in cases where there are compelled to excavate concrete floors alongside tiled or timber floor finishes, or where fitted furniture needs to be removed and replaced to access leaking pipework.

Such costs are not covered by household insurance policies. However, most policies do provide for a contribution - to a limit - towards the cost of Tracing and Accessing pipework from which water is escaping. Insurers will pay (up to the limit described) for reinstatement works to the building, e.g. the digging up of tiled floors, excavation of concrete floors and reinstatement of both, undertaken to trace and access a leaking pipe. Again, the cost of repairing the pipe is excluded.

Be aware that some wordings demand that there must be damage caused to the building by an escape of water before the trace and access cover can be triggered.

The various limits in the market vary between insurers, but they are not of a high-value. Policyholders need to be made aware of the effect that such a small claim might have on their premium or terms and conditions going forward.

Finally, there is often a debate as to how policy limits should be applied in the context of policy excesses. We believe that the correct approach is as follows:

1. Determine the adjusted loss
2. Apply the policy excess
3. Apply the limit
4. Amount payable

By means of example:

1. Cost of digging up and replacing floors = €2,000
2. Less Policy Excess = €500.00-
3. Apply limit = €700.00
4. Amount payable = €700.00

Or where the loss is less than the limit :

1. Cost of digging up and replacing floors = €1,000.00
2. Less Policy Excess = €500.00-
3. Apply limit = €700.00
4. Amount payable = €500.00

Therefore: apply the excess to the loss and then the limit; not the limit to the loss and then the excess.

Aside from trace & access, there is the potential for serious structural damage being caused by a leaking mains water pipe - leading to subsidence and structural movement.

In these circumstances Owens McCarthy regularly work with subsidence specialists, consulting engineers and civils contractor to determine (for the Policyholder) whether or not there are grounds to pursue a more serious claim under the terms of the policy.