Insurer loses appeal over finding it was liable to pay out over roof damage

Lloyd’s Insurance Company SA has lost its appeal against the High Court’s ruling that it was liable to pay out over roof damage in a family home.

The indemnity held by the complainant couple covered structural defects in the house.

Lloyd’s argued damage to the roof trusses was caused by the positioning of a water tank in the attic. This was damage caused “to” the structure, rather than “in” the structure, which it said placed it beyond the policy remit, the insurer said.

Last May the High Court upheld a decision of the Financial Services and Pensions Ombudsman to find against the insurer over its refusal to pay out on the claim.

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The ombudsman ruled it was unreasonable, unjust and improper for Lloyd’s not to remediate the damage complained of and ordered the insurer to pay €20,000 to the couple as compensation for the inconvenience caused.

Four years after the couple purchased their home and accompanying insurance policy, pyrite-related damage and roof structure damage came to light.

Lloyd’s paid out over the pyrite but did not accept the roof trusses damage was covered by the policy. It argued the trusses were deflected by the positioning of a water tank in the attic which put pressure on them and led to ceiling and wall cracks.

In appealing to the High Court, Lloyd’s submitted that the ombudsman was guilty of serious and significant error in its interpretation of the word “structure” in the policy.

Standing over its decision, the ombudsman said the defect in the trusses – a load-bearing part of the roof – fell within the policy definition of structure. The roofing structure, it said, is intended to hold water tanks and should be designed and constructed to carry out that purpose.

The High Court’s Ms Justice Siobhán Phelan said there were conflicting opinions on whether damage would have been caused to the trusses even if the water tanks had been correctly installed.

A reasonable person interpreting the contract would expect the roof trusses to have been designed and constructed in a way that rendered them fit to bear a water tank load “or at least [ . . . ] the ombudsman was entitled to take this view”, she said.

The ombudsman erred in relying, in part, on a particular subsection of the Financial Services and Pensions Ombudsman Act of 2017, but this was not a fatal error, the judge found.

Giving judgment on Monday for the three-judge Court of Appeal, Mr Justice Senan Allen said Lloyd’s failed to persuade the court that Ms Justice Phelan fell into error as alleged.

Among Lloyd’s complaints in its appeal was that the judge, it said, did not deal with the “positioning of the tanks as being the menace”. It also argued the ombudsman and the High Court expanded the definition of structure to include incorrect positioning and inadequate support for the water tanks.

Mr Justice Allen said it was agreed on all sides that the prefabricated trusses were part of the load-bearing part of the roof. The roofing structure, as defined in the policy, included the load-bearing parts of the roof, the judge said.

Once it is recognised that the prefabricated trusses were not fit for purpose, it must be plain that the ombudsman was entitled to conclude that the damage caused by the inadequate support of the tanks resulted from a defect in the design, construction and workmanship of the load-bearing part of the roof, as provided for in the policy, Mr Justice Allen went on.

He dismissed the appeal.

It seemed to him that the ombudsman was entitled to his costs of the appeal. Ms Justice Máire Whelan and Mr Justice Seamus Noonan agreed with the judgment.