Gradual Damage Insurance in NZ: What’s Covered and What Isn’t (With Case Example)
Water damage claim denied due to gradual damage? Learn the real difference between sudden and gradual water damage in NZ — and how the Ombudsman views insurer exclusions.
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The Assessing Co.
4/25/20252 min read
Gradual damage is one of the most common reasons New Zealand homeowners see their insurance claims declined — especially for water-related issues. But in our experience, many of these decisions stem not from clear evidence, but from a lack of understanding, limited investigation, and incorrect assumptions.
The reality is: gradual and hidden gradual damage are complex to assess, and insurers often rely on default exclusions without fully unpacking the cause or timeframe of the damage. At the same time, there are legitimate cases where gradual deterioration clearly applies and the exclusion is fair.
This article explores the difference between sudden damage and gradual damage, why these terms are misunderstood across the industry, how the Ombudsman interprets them, and what you can do if your claim has been unfairly denied.
🚿 What is Sudden vs. Gradual Water Damage?
Sudden Water Damage Examples:
Burst pipes
Washing machine failures
Roof leaks after a storm
These are typically covered, as they result from unexpected, one-time events.
Gradual Water Damage Examples:
Slow pipe leaks behind walls
Moisture buildup from old sealant
Rain ingress from deteriorated roofing
These are often excluded — but not always fairly.
🧾 What Your Insurance Policy Doesn’t Say
Most NZ policies mention “gradual damage” — but don’t define it clearly. There’s no specific timeframe in many contracts. This leads to disputes.
⚖️ What the Ombudsman Says About Gradual Damage
According to the Insurance & Financial Services Ombudsman, when a term like “gradual” isn’t defined, it must be interpreted using:
Basic contract law
Plain dictionary meaning (i.e., damage that happens slowly, occuring intermitantly over time)
Evidence, not assumption
Insurers must prove the damage occurred over an extended time — not just say it looks that way.
https://covernote.co.nz/covernote/ask-an-expert/timeframe-for-gradual-damage/
🏠 Case Study: Reversed Gradual Damage Denial
One of our clients in Auckland had water damage dismissed as “gradual deterioration.” But after a full independent assessment, we found:
Recent moisture readings
Signs of sudden ingress
Incomplete insurer investigation
✅ Within 10 days, their claim was fully accepted. [Link to full case study here]
🔍 Hidden Damage vs Gradual Damage: What’s the Difference?
“Hidden Gradual damage” is often used interchangeably with gradual damage — but that’s not always accurate. You can have sudden hidden damage, especially when a failure occurs inside walls or cabinetry. The key is proper technical evidence.
📋 What to Do If Your Claim Is Denied
Request the loss adjuster’s report
Review your policy wording (focus on exclusions)
Challenge the insurer with facts, not frustration
🧠 FAQs About Gradual Damage in Insurance
Q: Can gradual damage ever be covered?
A: Yes — in some cases yes, especially when linked to a sudden event, or if the insurer can’t prove the timeline.
Q: What if the leak was hidden behind walls?
A: Hidden damage may still be covered if it meets the criteria of being sudden or recent.
Q: Can I take the insurer to the Ombudsman?
A: Yes — and many rulings favour the homeowner when exclusions are vague.
💬 Think your claim was wrongly denied? Contact The Assessing Co. for an independent insurance assessment. We'll help you get clarity, fast.
Getting the classification right from the start can make or break your claim. Read how we helped a client with a denied claim for water damage the insurer classed as "Gradual Damage" here.
