Time to check your flood insurance coverage

If you haven’t checked your insurance cover in relation to floods in recent years, now is the time. Thousands of households affected by floods in NSW and Queensland earlier this year discovered the fine print on their policies had changed and they weren’t covered.

Now, Australia-based international brokerage Honan Insurance reports that in response to the scale of that flooding, insurers have been revisiting their stance on both storms and floods, – “a move that is set to impact limits, pricing, and the availability of cover”.

Large swathes of NSW, Victoria and Tasmania are now affected by flooding, with many householders no doubt needing to make claims.

Read: La Niña drives greater chance of cyclones and floods

Honan Insurance states: “To manage their exposure to widespread weather events such as this, many underwriters have amended their flood definitions to include Pluvial Flood. Whilst each insurer’s definition differs, the majority now extend ‘flood’ to include the accumulation of surface water from the release of drainage systems (normally engineered) or through rain precipitation. This means that policies are generally more restrictive because surface water will now be classified as a ‘flood’.”

For policies not carrying the Pluvial Flood extension, insurers will be issuing renewal terms with this included.

Travis Wendt, Honan’s head of placement, says: “This is all about reducing exposure, that’s my personal opinion.”

Read: There is one thing worse than fires, floods and COVID

He says he expects policyholders with storm coverage to face problems, especially when their properties are in pluvial flood zones, because “what was regarded as a storm event is now defined as flood, denying them coverage”.

In July, lawyers Marshall, Dent and Wilmoth (MDW) examined the changes that had taken place, and are still to come, in flood insurance, and how this will affect policyholders.

What exactly is a ‘flood’?

The MDW report revealed that after a number of storm, cyclone and flooding events in the summer of 2010–11, the Australian government commissioned the Natural Disaster Insurance Review (NDIR).

As part of that review, a standard definition of ‘flood’ in Australia was introduced:

The covering of normally dry land by water that has escaped or been released from the normal confines of:

  • any lake, or any river, creek or other natural watercourse, whether or not it is altered or modified; or
  • any reservoir, canal or dam.

Notably, this definition does not mention the word ‘storm’. Insurers, therefore, may exclude floods resulting from the sea or storm. Some policies will cover storm-related flood, while others will not. Many of those caught up in the Queensland and NSW floods earlier this year found out too late that they didn’t have the coverage they thought.

If you’re not sure which way your insurance leans, you’re not alone.

ASIC has found that many exclusions are often unknown to consumers when they purchase a policy. These exclusions should be a key consideration when choosing what policy to purchase, ASIC says.

Read: What to do if the weather inflames your joint pain

The problem here is that not many of us are legal experts. For the few who even have the time to read the fine print of their insurance policies, the jargon might get the better of them. MDW’s advice is, perhaps unsurprisingly, to seek insurance or legal advice – or both.

While that may seem unfair, not to mention costly, it might well be worth it if the worst were to happen. Spending a little more up-front to minimise the risk of unpleasant surprises when your house or small business is inundated could save a huge amount of financial pain.

Tracking your insurer’s definitions policy terms might have to become a regular part of your calendar in future. As insurance companies continue to examine the effects of climate change and adjust risks accordingly, they are also likely to adjust definitions and the terms of the policies they sell.

Before you prepare for the next torrent of water, you would be well advised to prepare for a torrent of changes to your insurance policy.

Have you had to make a claim as a result of flooding recently. What was your insurance experience? Why not share your experience and thoughts in the comments section below?

Andrew Gigacz
Andrew Gigaczhttps://www.patreon.com/AndrewGigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. I simply do not accept that people do not know what they Are covered for and what they Are not. How many times do we need telling to READ the PDS and don’t sign anything you do not understand? Yes, you need to set aside some time to read them and also compare them but it is OUR responsibility to do so. Insurance companies are in the business of not paying out on policies if they can help it, so the purchaser MUST be responsible for knowing what they are covered for. And not only at the time of purchase. There are often changes to the PDS made over time and policyholders are notified of the changes much like your credit card provider will for example or you microsoft agreements. But how many people actually bother to read the updates? Again it is our responsibility to do so.

  2. What a lot of rubbish, KSS. I am assuming you are a insurance salesman or in the industry. I’d be pretty sure you didn’t read the fine print on your phone, computer, car finance, FaceBook, or any web based service yoiu signed up for. If you did you have are in the minority, most people don’t and you must have enormous time on your hands. Insurance companies should at renewal notify you of any changes that they have made, and they shouldn’t be allowed to change the terms of your Insurance Contract mid-term. I was hit by a 450% increase on my Home Insurance, from a well known Motoring Group’s Insurance arm (of which I had been a member for over 50 years, so this included loyalty discount) with absolutely zero notification. The lack of notification certainly showed they cared little for my “loyalty” and was some of the worst Customer Service I have ever encountered.

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