Consumer groups have called for a common definition of floods in insurance policies as Queensland residents face the prospect of not being covered for damage to their homes.
According to lawyers and consumer advocates, water flowing from rivers, creeks, dams, lakes or reservoirs may not be covered in some insurers’ definition of a flood, leaving some insurance policy holders unknowingly unprotected to flood damage.
Choice spokesman Christopher Zinn said policies differed in whether they covered floods caused by intense local rainfall, such as storms and local run off from streets, drains and gutters, or floods caused by rain falling somewhere else and running down rivers or streams.
Mr Zinn said insurance companies did not make the distinction clear to many customers and called for a common definition of floods across all insurers.
“Many residents believe they are covered for flood and suddenly they are inundated and they find that they are not covered because of the differing definitions,” he said.
“We tested 45 policies a few months back and half of those did have comprehensive flood cover and half of them didn’t.
The Insurance Council of Australia put forward a proposal for a common definition of inland flooding in 2008, but it was denied authorisation from the Australian Competition and Consumer Commission on the basis that the proposal may actually create more confusion, rather than provide clarity for consumers.
At the time, the ACCC said the decision did not prevent the insurance industry from seeking authorisation for a revised proposal in the future and encouraged the council to put forward another definition.
Suncorp, the largest domestic insurer in the state, has a comprehensive policy which covers consumers for riverine flooding as well as localised damage, while RACQ covers for flash flooding and stormwater run-off from localised flooding. More extensive flood insurance can be purchased as an optional extra.
Allianz’s flood definition excludes “damage caused by the inundation of normally dry land by water that has been escaped or released from a natural water course”.
CBA’s standard insurance policy excludes damage caused by floods defined as water which has escaped from natural water courses as well as reservoirs, channels, canals or dams.
NRMA covers damage to customers’ homes and contents that was caused by the excessive amount of rainfall and stormwater run-off.
brisbanetimes.com.au has also attempted to obtain flood definintions from HBA and QBE.
Insurance Council of Australia spokeswoman Sandra Van Dijk said the organisation was open to discussing the issue of a standard flood definition.
She said policy buyers also needed to educate themselves on the difference in policies and make sure their policy covered everything they needed covering.
“It is important to read the product disclosure statement, that lists what’s included in the policy and what’s excluded,” she said.
The issue has been taken up by a Rockhampton lawyer who has offered free consultation for flood victims whose insurance claims have been rejected due to the definition of flood in their policy.
Maurice Blackburn Rockhampton manager Gino Andrieri said flood victims should lodge insurance claims even if they are told they are not covered for flood damage and consider challenging their insurance company’s fine print if their claim is not accepted.
“If your claim is rejected, you can appeal. Get legal advice,” he said.
Mr Andrieri said an overhaul of the insurance industry’s protection for consumers affected by storm and flood damage was overdue.
Source : The Sydney Morning Herald
