Honesty vital in flood insurance claims, says IFSO

In a recent case investigated by the IFSO Scheme, a woman’s claim for flood-damaged household contents was declined after inconsistencies were found in the information provided to the insurer.

Following the Auckland floods in January 2023, Heather (name has been changed) claimed that 43 household items—including large pieces of furniture—had been damaged and thrown away.

However, the insurer’s investigation revealed that some of these items were actually stored at a nearby storage facility.

When questioned, she provided a revised list with only 10 items.

The insurer concluded that false statements had been made in support of the claim and, under the policy’s terms, declined Heather’s claim and cancelled her policy.

Heather made a complaint to the IFSO Scheme. She told the IFSO Scheme that family members had helped move and dispose of items and that she had not visited the storage unit herself.

However, the IFSO Scheme still found it was “deliberately reckless” for Heather to say the items had been thrown out and seek compensation without taking reasonable steps to verify this. Her complaint was not upheld.

Insurance & Financial Services Ombudsman, Karen Stevens, says that with more frequent flooding events, many New Zealanders are facing the stress of making insurance claims.

She says it’s important to know the consequences of making a false statement on an insurance claim.

“Providing false information can result in your whole claim being declined, not just the items that were inaccurately included. And if you’re found to have committed fraud, then you’ll likely not be able to get insurance in future,” she says.

If people are unsure about the details, they should check before submitting their claim, she says. 

“It’s important to remember that insurance relies on trust. Honesty is always the best policy—especially when so many are relying on insurance to recover from natural disasters.” Stevens says.

The IFSO Scheme provides a free and independent service for consumers with insurance or financial services complaints. For more information, visit http://www.ifso.nz/.