Can more than one excess apply to a claim?

There can be unfortunate scenarios where you may have to pay your excess more than once when you make a single house insurance claim.

We try to make insurance transparent for everyone, but there are insurance conventions that we have to work with.  Applying an excess per incident can be particularly annoying if you’re not aware of it, so here’s some help to mitigate any future frustration.

Firstly, what does house insurance usually cover?

You might already be familiar with this. House insurance covers sudden and accidental events – something unexpected that results in physical damage. This will extend to intentional damage by tenants if you have landlord’s insurance.

Your house insurance won’t cover gradual damage over time such as rotting weatherboards. Like humans, houses need maintenance to stay in working order. There is no sudden (or unexpected) event that’s causing the rotting, so there’s no insurance claim.

If you have some unexpected damage, you’ll then need to pay your excess before your insurance kicks in. However, it’s not as straightforward as it sounds – because the excess applies to each insurance ‘incident’ and not just to each claim.

So, what’s considered an ‘event’?

The ‘incident’ is the time and place the damage or loss occurred.

For example, if something caused a hole in the wall on two different days, and in two different rooms of the house, then those would be seen as different ‘incidents’ – even if the landlord found all the damage on the same day and lodged a single claim.

Each separate incident could result in a separate excess being payable on each. Which can be a nasty surprise.

Why does this have to apply?

Trust us, this is something we want to avoid, but there is a reason it applies.

If a landlord could group all bits of damage over a tenancy into a single claim with a single excess charge, you could claim on any little dents and damage around the house. House insurance would begin to look like a property maintenance cover, and ultimately the premiums and volume of claims would become astronomical, and make insurance unaffordable for everyone.

What does a ‘multiple incident’ claim look like?

The most common example we see is when a tenant moves out, and the landlord discovers they’ve left behind a lot of unreported damage – holes in walls, stains in carpets, doors with broken hinges etc.

The landlord then files a single claim for recovery of all the damage. However, if it’s clear the damage was from multiple ‘incidents’ over the course of the tenancy, an excess is applied to each one.

This means the insurance payout is either much lower, or the claim will not proceed if all the excesses exceed the repair costs.

Damaged carpet

Stains in carpet – a sight all too familiar for landlords.

Exceptions to the rule

It isn’t always the case that an excess will apply to each piece of damage. This is where it can become a little technical, and on a case-by-case basis.

Multiple bits of damage at the same time

Sometimes multiple incidents are considered to be the result of a single source event, and only one excess will apply.

  • For example, if a tenant is given eviction notice, and decides to take this out on walls in anger before they leave; or if a party gets out of control, with predictable damage to doors, windows and carpets.

In these examples there is a single source that caused the event in an approximate time period. The interpretation of the source can be subjective, and every claim has its unique circumstances and will be considered on its own merits.

One excess per room

Policies are designed to cover damage resulting from a single event. When a ‘single event’ cannot be confirmed, most insurers apply an excess to each incident, meaning each stain/dent etc. However, at initio we believe this approach can be unfair, so we endeavour to apply one excess per room, per item of damage (one excess for wall damage in a bedroom, one excess for carpet damage in a room).

What about those ‘one excess’ advertisements?

Paying an excess per incident is standard practice. When insurers advertise that they charge only ‘one excess’, they are usually referring to a single event that causes damage across several policies.

For example, if a flood soaks your garage, car and some loose contents, you might only have to pay one excess – usually the highest. It’s one of those ‘check the fine print for the asterisk’ sort of promises.

What you can do to manage this risk

The best way to avoid all of this is to keep on top of the condition of your property with regular inspections. This will help identify bits of damage before they become widespread. If you’re recording the house’s condition for each inspection, you’ll also have a better idea of when damage was caused.

The best form of risk management is being a proactive landlord. Most landlord policy wordings include requirements, called landlord obligations – that you should get yourself familiar with.

Meeting these are a great way to reduce your risk; like screening tenants, monitoring rents, doing regular inspections and collecting a bond at the beginning of a tenancy.

Insurance is a two way agreement. The more you do to manage your risks, the better chance you have of avoiding an ugly multiple excess claim.