Case Study: When Drying Isn’t Enough — A Hot Water Cylinder Claim Gone Sideways
CASE STUDIES
A ceiling-mounted hot water cylinder failed, flooding multiple areas of the home. With no formal assessment and drying equipment running for over three weeks, the insurer initially offered a lowball cash settlement. Our independent review not only rectified the scope but more than doubled the claim outcome, helping the homeowner secure a $38K settlement (excluding temporary accommodation).
Background
The hot water cylinder failed in the ceiling space, causing widespread water damage to flooring, walls, ceilings, and built-in shelving. The insured acted quickly — extracting water and lodging a claim within a few days. However, no assessor or loss adjuster was ever appointed.
Instead, a restoration company was sent out nearly 100 hours after the event with a sole instruction: “dry the property.”
Poor Process & Lack of Oversight
At the time of our engagement, there had still been no insurer involvement or assessor input. Claim management had effectively been outsourced to the restoration company, with no checks or balances. This is problematic because:
Restorers take instruction from insurers and typically do not have authority to determine claim viability or practicality.
To avoid liability, drying will continue until someone tells them to stop.
The insured was left in a humid, noisy, uncomfortable environment for over three weeks during the peak of summer, with no direction, oversight, or plan.
This approach fails both in process and in duty of care.
What We Found
Our independent assessment revealed:
Elevated moisture still trapped beneath direct-fixed bamboo flooring
Damage to internal walls and ceiling linings
Lack of microbial treatment
Paint bubbling and surface damage overlooked
No planning around temporary accommodation despite the property being largely uninhabitable during drying and repairs
Undervalued Scope & Lowball Offer
Following our initial report, the insurer’s contractor presented a scope and offered just $16,000 in settlement — based on a stripped-down view of the damage. Despite having received our detailed report, the insurer’s assessor ignored key findings and omitted:
Ceiling and scotia repairs
Bottom plate moisture remediation
Wallpaper stripping and redecoration
Microbial risk mitigation
Proper flooring allowance
Our Response & Result
We submitted a revised scope of works, supported by photographic evidence, moisture readings, and technical references (including IICRC S500). We argued that:
The scope was understated and incomplete
The drying had gone on far too long without reassessment
The insured had been left vulnerable and unsupported
A full reassessment of the claim was required
The insurer agreed, resulting in an updated offer that more than doubled the original amount.
Outcome
Initial offer: $16,000
Final settlement: $38,000+GST (excluding temporary accommodation)
Insurer accepted our scope and recommendations
Insured spared from significant out-of-pocket costs
Why This Matters
Insurers rely on process. When that process breaks down — when assessors aren’t appointed and restorers are left to manage the claim — the result is confusion, delays, and inadequate outcomes.
This case highlights the importance of independent oversight and early intervention. It’s not just about getting the right result — it’s about protecting the policyholder throughout the journey.
