Staff at insurance group Zurich misled a customer in a letter telling them they would not be covered under their policy in the event of a flood claim, the company has accepted.
The insurer says it will write to the customer, and any others affected, to confirm that flood cover is included in their policy.
“Zurich acknowledges that the answer provided on that occasion was incorrect and resulted in confusion for the customer,” it said.
The firm, the third-largest player in Ireland’s home insurance market, continues to insist that new wording it has added to its definition of the word “flood” and to exclusions elsewhere in its home policies do not change their treatment of claims.
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“It is important to note, even though incorrect information was provided to this customer, any valid claim for flood damage under the customer’s policy would have been paid irrespective of what was said in the letter,” the company said.
It does not clarify how a customer in receipt of a letter telling them they would not be covered for flood damage could possibly know they would be covered and could claim for such damage.
The insurer, which provides protection for about one in seven Irish homes and businesses, now excludes any damage caused to buildings or contents by “water backing up from any sewer, drain or ditch or any surface water run-off” from future claims under a section governing escape of water from any domestic water or heating installation, including from white goods or a fish tank.
At issue appear to be those people whose homes are not covered for floods. Figures from the Central Bank of Ireland state that one in 20 homes across the State either cannot get flood cover or are limited in their capacity to do so.
That amounts to more than 100,000 homes. On the basis of market share, that would include around 14,750 homes covered by Zurich.
The company has said consistently it was simply clarifying “ambiguous wording”.
“The policy still provides cover for flood, unless there is a specific flood exclusion on the policy. If you have a flood exclusion on your policy, there is no cover for flood, as would have been the case before the new wording,” it said.
“The escape of water peril insures water damage as a result of an escape of water from or the bursting of any domestic water or heating installation. This has not changed.
“If a property has a flood exclusion, and you submit a claim for flood damage under the Escape of Water section, there is no cover for this, before or after the new wording.”
However, industry experts described the changes to policy phrasing as “a significant change of wording” and one that would affect some policyholders. And the incorrect letter sent to the customer suggests even the insurer’s own staff were unclear on the impact of the wording.
The customer at the centre of the row does have cover for flood damage, having undertaken flood mitigation measures on a property that was flooded years ago.
They contacted Zurich several times when they were notified of the new wording in the policy as their mortgage requires flood cover. Any loss of such cover would have forced them to look elsewhere for home insurance.
The letter, now accepted as misleading, was sent after that series of exchanges, with the customer being told the information had been checked by Zurich staff with the insurer’s product team and claims department.
