Tag Archives: catastrophic floods

  • Flood Insurance Debate

    Posted on 27 February, 2012

    Since the catastrophic floods in Queensland and NSW in 2011, there has been much controversy about the issue of Flood insurance and the Federal government is demanding the insurance industry to provide coverage in future and to be consisitent with each insurer’s definition of Flood to guarantee certainty of coverage in the community.

    So what’s the difference between Flood, Storm and Water Damage coverage under a Home insurance policy and why is Flood risk excluded generally?

    Flood generally means
    the complete covering of normally dry land by any water:
    escaping or released from the normal borders of any lake or natural watercourse or any reservoir, canal, dam, or stormwater channel or cannot enter such due to water already having escaped or been released

    Storm means:
    cyclone, hurricane, rain, snow, sleet or hail

    Water Damage means:
    water suddenly escaping from a water carrying or holding device due to the bursting, leaking, or discharging or overflowing of the device

    Both Storm and Water Damage are covered under a standard Home insurance policy but Flood has not been traditionally offered by many insurers. The main reason for this is the previous absence of good flood mapping data availability for insurers to be able to assess the potential risk of flood caused damage in prone areas. Also local councils have allowed people to build houses in high flood risk areas and they have not engaged sufficiently in mitigating damage to those properties in future rainy seasons.

    Some insurers are now offering automatic Flood cover as better mapping data has become available but policyholders can elect to opt out of Flood coverage if they consider the extrra cost for the cover is too high for them to bear. It is estimated that less than 5% of properties will be be unable to buy Flood insurance in future while others will have to pay for the cover according to their risk assessment whether they like it or not unless they are permitted by their insurer to opt out of the Flood cover.

    Donnellys is able to offer a Flood insurance solution for most homeowners and SME clients around Australia.

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