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A domestic property or small business property may be damaged by water in a number of ways and people will often just say, ?It was a flood?.
Insurance policies have specific terms dealing with water damage which must be distinguished. Not everything related to water damage is considered flood damage by insurance companies.
The property may suffer water damage from:
(a) ?? Stormwater/rainfall run-off/flash flooding;
(b) ?? Rivers, creeks or lakes overflowing;
(c) ?? Storm surge/sea level rise/king tides;
(d) ?? Burst pipes or equipment failure within the building.
There is generally poor consumer knowledge about ?flood insurance?.
Where there is a storm which causes heavy rainfall which runs off through a property towards a watercourse (say, a river or creek), any damage is treated as ?storm and tempest? and cover is usually granted.
However, when a river, creek or lake rises and over flows and the water flows across normally dry land into a property, insurers usually regard this water as ?flood? and in many cases there is no insurance cover. Where there is inundation by sea water from waves or high tides, properties are generally not insured against this risk.
There is usually cover against water damage caused by broken pipes or equipment.
The terminology used in insurance policies by various insurers as to what is meant by ?flood? differs remarkably.
Many insurers do not cover damage by ?flood? although there is an increasing number who do.
The Federal Government is now working on a proposal for a common definition and a possible requirement that all insurers of domestic homes offer flood protection as part of the insurance package subject to the consumer?s right to opt out of this cover.
A consultation paper has been released. There are maps available which do show areas which may be subject to flooding. Some 7% of Australian homes face some flood risk.
The wording of a particular policy is critical in determining whether a consumer has cover.
Consumers must carefully check the definitions in the insurance policies and if they do not understand it or it is not clear, seek professional advice to ensure you are getting the insurance cover you actually want.
The causes of any damage are closely examined by insurers to ascertain whether the damage is caused by rainwater run-off from the house or surrounds or by water overflowing from water courses or by being prevented from entering a watercourse which is already full.
If you have insurance on a property, you need to carefully check the insurance policy to ascertain what risk is covered especially in a flood prone area.
If you?d like some information or assistance about your insurance or a claim you are trying to settle, why not have a chat with the writer of this blog, John Daenke from Andersons Solicitors.
Please note, this Blog is posted in Adelaide, South Australia. It relates to South Australian legislation.
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