Monsoonal deluges and the flooding that ensued became a terrible catastrophe for thousands of Townsville residents earlier this year. Severe flooding caused widespread damage to an unprecedented number of properties, including residential strata. In the aftermath of a flood, many depend on their insurance to help recoup losses. Sadly, however, stressful situations are often made worse when people find out their Strata Insurance policy does not cover damage as a result of flood.
This article looks at the ins and outs of flood insurance, and whether flood cover can be included within your Residential Strata Insurance policy.How is ‘flood’ defined by insurers in Australia?
Previously, each insurance company had their own definition within their policy wordings of what constituted ‘flood’. However, in 2012, the Insurance Council of Australia (ICA) made a decision to introduce a statutory definition of ‘flood’ across various insurance contracts. Core objectives of the legislation were to:- standardise the scope of flood cover across all Australian insurers, and
- reduce consumer confusion around what constitutes flood
- any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or
- any reservoir, canal, or dam.
Does this definition apply to all insurance contracts?
Generally, the flood insurance definition applies to a number of different insurance policies including Strata Insurance, Home and Contents Insurance, Car Insurance and Business Insurance.Misconceptions of flood cover
Despite the introduction of a standard flood definition, we still find that many individuals are unsure of what constitutes flood when it comes to a claim. In particular, because lines can sometimes feel blurred between what is considered ‘storm damage’, and what is considered ‘flood’ by an insurer. Below we have outlined two examples to help put the standard flood definition into context:Flood claim example
If water escapes or overflows e.g. from a lake or water course, it is deemed in the insurers eyes as a flood. In this instance, your Strata property would only be covered for the resultant damage if you have purchased flood cover as an additional feature under your Residential Strata Insurance policy. NOTE: A standard definition for flood does not automatically mean flood cover is included in your Residential Strata Insurance policy. Flood must be added as an additional cover feature.Storm damage claim example
A storm accompanied by extremely heavy rain and high winds passes through, dislodging roof tiles at a strata property. As a result, rainwater permeates into the plaster of the ceilings and walls of several strata units, causing severe water damage. The resultant damage here is deemed to be a consequence of the storm and not of flood, therefore it would generally be covered under a Residential Strata Insurance policy (subject to terms and conditions specific to the policy).
What does flood insurance cover include?
Generally, in a Residential Strata policy, flood insurance will provide cover for the building structure and any fixtures and fittings in Common Property areas where flood has been deemed as the cause of damage.Can I get flood cover for my Residential Strata property?
Strata Insurance policies do provide storm damage cover but generally do not automatically provide flood cover. Flood cover can be requested by the Owners Corporation, however, insurers will assess their willingness to offer flood cover based on the location of property, and the proximity of rivers, lakes and dams. Generally, insurers will refer to flood mapping to understand whether the area is prone to flooding. This information helps insurers determine if they are able to provide flood cover under the Strata Insurance policy. If flood insurance is granted, this extension of cover will likely attract an additional premium. Some insurers do automatically include flood cover under their Strata policies, however, if the insurer believes the property is in a flood prone area, they will generally not provide the automatic cover. Please bear in mind that some insurers do not offer flood cover under any circumstances. It is important, therefore, if you do want flood cover, and are willing to pay an additional premium for this feature, that you select a Strata Insurer who can offer this policy feature.
