What is, and what is not gradual water damage?

Gradual water damage claims are not straightforward.  This is a simple guide to what is, and what is not a gradual damage claim.

Insurance typically will exclude cover for gradual damage or wear and tear to a property.  Under the initio policy wording the exception to this is the additional ‘Hidden Gradual Damage’ benefit. This provides cover up to $3,000 for gradual and hidden water damage.

However, there are certain requirements for gradual water damage to be covered under the ‘Hidden Gradual Damage’ policy extension.

What is considered a Gradual Water Damage Claim?

Put simply, the damage needs to be hidden and it needs to be caused by an internal pipe or tank.

‘Hidden’ means that the water damage or leak was not visible. Cover does not apply if there’s a visible exterior leak that can be prevented.

‘Internal pipe’ or tank is specific. This includes waste pipes, water pipes (i.e. pressure pipes), and hot water cylinders. If the source of the leak is not from one of these then you don’t have a claim under your initio policy.

Hidden Gradual Damage Claim Examples:
  • Leaking kitchen sink waste pipe behind the benchtop, causing hidden water damage and mould to the kitchen cabinets.
  • Leaking pressure pipe in the wall behind the shower.  The leaking water slowly causes rot in the wall lining and floorboards.
  • The water source for a hot water cylinder fails due to a leaking valve. This runs water down the inside of wall and causes the wooden flooring below to swell.

What is Not a Gradual Water Damage Claim?

An exterior or visible water leak, or one that does not come from an internal pipe/tank can not be a Hidden Gradual Damage claim. A leaking shower tray or bathtub would not be claimable as it is visible.
Not Hidden Gradual Damage Claims:
  • Leaking window frame which causes rain to leak onto the window sill.
  • Water leaking onto the floor from a faulty washing machine.
  • Damage to the carpet caused by moisture from a pot plant.

What damage does initio cover?

Insurance is designed to cover the resulting damage of the leak (the kitchen cabinets, damage to the wall etc). Initio will also pay the  costs to repair damage caused by accessing the leak. For example, repairing a wall that was cut to access a leaking pipe.

Initio will not pay to fix the leaking pipe itself.  The policy provides cover for the resulting damage, but is not designed to fix the faulty source of the damage. The cost to repair the cause of a leak is the responsibility of the homeowner.

Example Claim

A tenant discovers that the kitchen floor is spongy under the lino. The water supply pipe for the cold tap had been slowly dripping. Over time it caused the kitchen cabinet to swell and the particleboard to deteriorate.

The landlord lodges a claim under his initio landlord insurance policy and arranges a plumber to quote the repair costs.

Initio authorises the repairs and the claim is settled as follows:

Item Amount Claimable?
Sink Cabinet Panels $866 Yes
Fixing, Screws, Glues $63 Yes
Particle Board Sheet $110 Yes
Builder’s Labour $590 Yes, if initio have given consent
Relaying of Lino $783 Yes
Piping Replacement $23 Not included in cover
Plumber’s Labour $65 Not included in cover

Total Cost: $2,500

* Less items not claimable
Repair/replacement of Broken Pipe (Piping and Labour):  $88

Claimable Amount: $2,412

Less Excess: $400

Initio Payout: $2,012

Amount customer pays (excess & pipe fix): $488