During GIO’s Informal Conciliation, the GIO contacted the Insurer to request a reconsideration of the claim denial for the following reasons:

• The Consumer promptly reported the claim upon noticing water stains on walls. Acting responsibly, the consumer first consulted a foundation expert to determine the cause of the damage. When this was ruled out, they hired a plumber, who then removed the drywall and discovered the crack and disconnection in the pipe.
• The policy does not clearly define what constitutes “sudden and accidental”.
• It is unreasonable to expect consumers to open their walls to inspect for water leaks from pipes concealed within drywall.

GIO’s Investigation Officer discussed the matter with the Insurer acknowledging the policy coverage and the specific exclusions cited. However, they argued that it is unreasonable to expect the homeowner to routinely open drywall to inspect pipes without any signs of a problem.

Regarding the exclusion for mold, the Investigation Officer pointed out that no mold inspection or testing report was provided by the Insurer. Therefore, there was no concrete evidence of mold, only an assumption by the claims adjuster based on photos submitted by the contractor.

Despite this discussion, the Insurer maintained their denial of the claim, leading the case to proceed to mediation.