Auckland man's two-year battle with insurer over collapsed pool excavation

A man tried to claim on his construction insurance policy after excavation work for the installation of a swimming pool went wrong. Photo/Getty Images.

A man battled with his insurer for nearly two years after excavations for a pool he wanted to install collapsed, damaging his garden, a boundary fence and some of his neighbour's land.

The Aucklander, known only as Mr V, was one of the 322 complaints to the Insurance and Financial Services Ombudsman (IFSO) in the year to June 30.

Complaints to the IFSO rose only slightly from last year's 320, but complaint enquiries were up substantially from 3,357 to 3805 - a 13 per cent increase.

Mr V arranged for construction insurance before work began on the swimming pool in July 2017.

When the excavations collapsed he made a claim under the policy but the insurer only accepted part of the claim for removing some of the debris.

It declined to pay for damage to the neighbour's land and fence because the policy did not cover third party property.

The insurer also refused to pay for the cost of adding support to the excavation, citing an exclusion for defective workmanship.

In case notes the ombudsman said the insurer believed the pool company should have got geotechnical engineering advice due to the time of year and proximity to the property boundary. The pool company also failed to use a plastic cover to protect the excavations.

But Mr V denied the pool company's work was defective and believed the insurer should cover all the costs.

The ombudsman's case manager got independent expert advice and found that while a geotechnical report was not required, a plastic cover to protect the excavations should have been standard practice.

"As a result, the case manager believed the insurer was entitled to rely on the exclusion for defective workmanship."

Fortunately, a compromise was reached as the case manager discovered Mr V had house insurance with the same insurer and the insurer agreed to accept the claim for damage to the fence and neighbour's land under the liability section of the house policy.

It paid out $16,855 in a settlement agreement. The case was finally closed on April 2 this year.

Policy exclusions and scope of cover complaints were some of the most complained about issues in the last year alongside pre-existing conditions and gradual damage.

Karen Stevens, Insurance and Financial Services Ombudsman said its complaints showed many people simply did not understand the policy or contract they were signing up to.

"Insurance does not cover all things at all times. The best time to understand your cover is before you might need it," she said.

Of the 225 complaints, 70 per cent were about general insurance with 91 relating to house insurance, 54 travel, 46 vehicle and 22 contents insurance.

A further 25 per cent of complaints related to health, life and disability insurance and the other 5 per cent were about credit contracts and financial advisers.