Understanding the Insurance Cover for Gradual Damage

Home Insurance policies are an important form of protection for damage that can happen to your property suddenly and without warning. Fire, theft, and storm damage are just some examples of risks that an insurance policy can protect you from. 

But in order to make an insurance claim, the damage has to have been from an insured event, and in most situations, needs to be sudden and unexpected. Most home insurance policies generally do not cover gradual damage, although some hidden gradual physical damage may be covered under some policies up to a certain limit and under certain conditions.

On this page, we’ll discuss what gradual damage is, so you can better understand what your insurance policy may and may not cover. We’ll also give you tips to help mitigate gradual damage and protect your property.

This page contains general information only and it is always important to check the specific terms of each policy.

What is gradual damage?

Gradual damage is deterioration that happens over a period of time and can often be prevented or mitigated with regular maintenance. Consequently, most gradual damage is not covered by insurance.

Gradual damage happens slowly, even if it is only noticed once it is well advanced.

Some examples of gradual damage include:

• Normal wear and tear
• Rot and corrosion
• Damage caused over time by a water leak

How can you tell the difference between sudden and gradual damage?

Often, gradual damage is only noticed when you see physical evidence of it, but the damage has happened over time.

An example of gradual damage might be a leak from a bathtub. One day, you notice that the floorboards in your bathroom have become spongy or warped due to water damage from a leak. You eventually realise the cause is that the bathtub has a small crack that has leaked water onto the floor during use. Over time, this water caused damage to the floor. This would be considered gradual damage because the damage occurred slowly. It would not be covered by insurance because, under a typical policy, the only cover you get for gradual damage under insurance is when the leak comes from an internal water system and was not noticed by you until the damage became evident. 

By contrast, sudden and unforeseen damage is not caused by an underlying gradual process. For example, if the porch collapsed during a heavy storm due to high winds, and an inspection showed that there was no underlying rot that weakened the structure, then the claim is likely to be covered as a sudden and unforeseen insured event.

What about gradual damage that can't be seen?

Sometimes, the cause of gradual water damage is completely hidden, and therefore undetected until it gets bad enough to become evident to you. Because of this, a typical insurance policy may provide limited coverage for gradual physical damage caused by a hidden water leak from an internal water system in your house.

For the loss to be considered hidden gradual water damage, it must result from a leak in a pipe or water tank that is part of an internal water system. 

For example, a water pipe, water storage tank, or waste disposal pipe would be hidden.

If a hidden pipe leaks, it can cause damage to your walls, floorboards, ceilings, cupboards and other property. AMP’s Comprehensive Everyday Plus Home Insurance policy covers gradual physical damage resulting from a hidden water leak or overflow, provided that the leak first occurs within the insurance period. 

Covered damages may include the cost of repairing damage caused by the water and damage done to find the source of the leak (for example, opening a wall to find the leaking pipe), but not repair of the leak itself (for example, the cost of hiring a plumber to repair the leak).

AMP’s Comprehensive Everyday Plus Home Insurance and Comprehensive HomePlan Maxi policies cover hidden gradual physical damage caused by water leakage up to a maximum of $5000 while our Comprehensive Everyday Plus Landlord Insurance policy covers hidden gradual physical damage caused by water leakage up to a maximum of $2500.

It is important to note your excess will be deducted from the loss and not the limit. For example, a gradual damage claim for $6,000 with an excess of $500 would be settled for $5,000. A gradual damage claim for $5,000 with an excess of $500 would be settled for $4,500. Note – with AMP policies, if home and contents are damaged in the same event, the higher of the two excesses will apply.

How can I protect myself from gradual damage?

Because gradual damage is commonly excluded from insurance policies, it’s important to maintain your home properly to protect your investment. As a property owner, you can prevent or mitigate losses due to gradual damage by conducting routine maintenance. Regular upkeep of your property will save you money in the long run as you catch minor problems before they become big, expensive ones.

Although it is great to have this additional cover, the costs of repair can be higher than the limit insured. So to help prevent this happening, here are some key actions you can take to prevent gradual damage to your property.

• Inspect your property regularly for signs of rot, mould, and mildew. Look for peeling paint, discolourations on walls and floors, and musty smells. These can be signs of water leakage.
• Fix any water leaks immediately and dry out any water that has been collected indoors.
• Keep all home systems, like water heaters, air conditioners, and garbage disposals, in a state of good repair by conducting regular maintenance as directed by the manufacturer.
• Ensure storm drains are clear so that rainwater drains away from your property.
• Properly dispose of garbage and avoid storing clutter that can hide the damage.

AMP’s Home and Contents Insurance and Landlord Insurance can help you protect your most important investments from unexpected losses. These policies provide limited coverage for gradual damage that arises due to a hidden water leak.

The information in this blog is of a general nature and does not constitute financial or other professional advice. Policy limits and exclusions apply - refer to the policy wording for full terms and conditions.