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Our binding decisions

Property damage/surge (C/98/1115)

Case number: C/98/1115
Date of Decision: 4 June 1998
Decision accepted by the customer: Yes

A customer contacted EIOV stating her electricity company would not honour her claim for appliance damage following a kitchen fire.

The customer stated a broken cross-arm on a company pole caused a supply malfunction leading to her appliances overheating and catching fire. Extensive kitchen repairs were required, and appliances throughout the customer's house were severely damaged.

Following the incident, two company representatives visited the customer's home at different times, advising variously that the company would pay her the replacement value of her damaged appliances and that she would receive secondhand replacements. The appliances claimed were a refrigerator, stove, photocopier, oven, electronic piano, two televisions and a lamp. The total claim was between $8,290.57 and $13,785.57; the difference represented the replacement value of the piano the customer's now-deceased father gave her, to pass on to her daughter. The customer was unable to place a monetary value on the item.

Following a third visit by their insurance assessor, the company offered to honour the full amount of repairable items claimed and provide compensation to the depreciated value of the items requiring replacement. The total offered was $4,428.10.

The customer was not satisfied with this response as she felt the company should provide her with similar secondhand appliances or, failing this, new appliances. The customer felt the company should bear the inconvenience of replacing the appliances. The customer cared for her invalid husband and small child, and the couple received a very low combined income. The customer did not own a car, and advised she would have to travel to a major town to source appliances. Since the incident, the customer relied on takeaway food outlets and relatives for meals.

EIOV investigated the matter, obtaining company confirmation that they accepted liability for the incident. The company stated it abided by the Trade Practices Act provision that the customer be restored to her previous position, and no better or worse. The company also stated further liability issues would arise if they provided the customer with secondhand appliances.

Following the matter being unable to be resolved via negotiation, during which time the company increased their offer by $321.90, the parties sought the binding decision of the Ombudsman to resolve the matter.

The Ombudsman considered relevant law, codes and regulations, noting the damage to the customer's property may have been far greater had she not had a fire extinguisher on the premises. The Ombudsman also considered the extent of the inconvenience and enforced change of lifestyle being experienced by the customer and her family and the customer's personal circumstances.

The Ombudsman determined that the company pay the customer $6,976.70, which included an amount to compensate the customer for her damaged appliances, following a recommendation by EIOV's independent loss adjustor. The amount included a 25% loading to take into account the substantial problems the customer would encounter replacing some items due to her personal circumstances. A small amount of the payment related to further items claimed during the investigation, such as refrigerator hire, and postage costs associated with providing information to the company and EIOV. $1,000.00 of the amount represented a payment for the level of customer service and inconvenience experienced by the customer, including costs for food and travel associated with her loss of essential appliances.