Co-author: TJ Ryan
Is my home covered for flood damage?
Your home may or may not be covered for flood damage, depending on your insurance provider and the inclusions and exclusions of your home and contents insurance policy. Flood cover is included in many home insurance policies as standard but is a notable exclusion from other policies.
The table below displays a snapshot of some of the combined home & contents products on Canstar’s database with flash flooding cover and direct links to the providers’ websites, sorted by Star Rating (highest to lowest) then by provider name (alphabetically). These results are based on a policyholder under 50 years old in New South Wales and ACT for building & contents worth less than $550,000. Check upfront with your provider and read the PDS to confirm what other sorts of flood cover may be available, and whether the policy as a whole meets your needs.
Another possibility is that your insurer may include flood cover as standard but allow you to ‘opt out’ of this cover to make your insurance premiums cheaper. Some insurers specify limits on flood damage coverage, meaning the amount you get back on a successful claim may not be enough to fully repair the flood damage your house suffers.
Confusion can arise due to the fact that insurers use different terms to explain what they will and won’t cover in relation to floods. Your exact level of coverage will depend on your insurer and policy, but based on analysis by Canstar Research, a summary of some common types of flood damage and whether insurers are likely to cover them is as follows:
| Type of flood | Covered by insurance? | |
|---|---|---|
| Water that escapes from its natural course, such as rivers, creeks, and water-catchment systems that are swollen with heavy rain |  |
Usually yes |
| Sudden, excessive run-off water as a direct result of a storm, including overflowing creeks or storm water drains | |
Usually yes |
| Waves from tsunami caused by earthquake or volcanic eruption | |
Usually yes |
| Flash flood that involves rainwater mixed with floodwater |  |
Varies |
| Cause of flood was man-made, such as a blocked or broken storm water drain |  |
Usually not (usually excluded from cover) |
| Waves from normal movement or changes in sea or ocean levels (actions of the sea) | |
Usually not |
| Waves from high tide or king tide (actions of the sea) | |
Usually not |
| Source: www.canstar.com.au | ||
Most policies will cover rainwater run-off, which is a flood caused when there is too much rain in your area and there is nowhere for the water to go.
However, most policies will exclude (refuse to cover) events such as flooding without rain in your area, landslip due to storms and tidal flooding.
There is a sliding scale of coverage where damage is caused by flash flooding of rivers, creeks, drains or heavy rains. In the event of flash flooding, the source of the water influx seems to be of paramount importance to many insurers. Where flooding is claimed to have been caused by a storm, another question insurers often ask is how soon after the storm the flooding occurred.
This means that even if your policy excludes flood damage, your home and contents insurance may still cover you for events such as storm damage or rainwater damage.
If you are renting and only have contents insurance rather than home insurance, check whether your contents insurance policy covers flood damage to your belongings (see the policy disclosure statement [or PDS] for details). It will typically be your landlord’s responsibility to ensure the building you live in is covered by their landlord insurance or by the body corporate’s strata building insurance.
Is my car covered for flood damage?
Your car may or may not be covered for flood damage, depending on your insurance provider and the type of car insurance policy you hold. Typically, most car insurance providers will offer flood cover for those with Comprehensive car insurance.
In the market for a car insurance policy? The table below displays a snapshot of car insurance policies on Canstar’s database with links direct to providers’ websites. Policies shown are those where hail or flood claims will not always impact your no claims discount. Please note this table has been sorted by Star Rating (highest to lowest) then by provider name (alphabetically) and was formulated based on a male aged 30-39 in NSW, without an extra driver under 25 years old. Check upfront with your provider and read the PDS to confirm the details of your no claims bonus and whether the policy as a whole suits your needs.
Am I covered by the new definition of ‘flood’?
In the wake of the 2010-11 Queensland floods and after extensive consultation with industry, a standard definition of ‘flood’ was developed for small business and home and contents insurance policies. Introduced by the federal government in June 2012, the definition of flood is:
“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 altered or modified; or
- Any reservoir, canal or dam.”
Insurers were given two years to include this definition in their policies (by June 2014), so most policies should now be using this up-to-date definition. You can check what definition of flood your insurer is using in the PDS for your policy or by contacting them to find out.
If you are affected by a flood and need assistance in understanding your insurance policy, or have queries about how the claims process works, it might be worth calling the Insurance Council of Australia’s Catastrophe Hotline on 1800 734 621.
Is there mandatory flood cover?
No. Following the 2011 Queensland floods, the federal government floated the idea of making flood cover a mandatory part of insurance policies, and specified the new, standard definition of a ‘flood’. Although the new definition stuck, flood cover was not legislated to be mandatory in the end, so it’s not legally compulsory for insurers to include flood cover in their policies.
Based on the new definition, many insurance companies now only offer policies that do include flood cover, which has made some home insurance premiums more expensive in certain areas, including in very low-risk flood zones. Before committing to a particular policy, it could therefore be worth considering how flood-prone your area is, and whether or not getting flood cover as part of your policy is worth paying a potentially higher premium.
Am I at risk of a flood?
According to 2019 data from the Insurance Council of Australia, insurers believe about 2.8% of properties have moderate to extreme risks of flooding, and 7% have some exposure. On top of that, about 80% of insurance losses from floods take place in regions that have flooded in the past.
Check the Australian government’s Flood Risk Information Portal to estimate the risk of flood in your area. This portal has been developed by the state and territory governments in tandem with the insurance industry.
Source: Bunnings Warehouse
Finding a good deal on flood insurance
To get a suitable policy for you when looking to financially protect your property from floods, it can be a good idea to shop around. As flood cover is sometimes included within home and contents insurance or even car insurance, it’s important to check exactly what your policy covers you for.
If you are in or near a flood zone, you may have difficulty obtaining flood cover. Alternatively, in some cases there may be a surcharge (a higher premium) or a flood excess (an amount charged if you make a claim), depending on the risk level perceived by the insurer. However, since different insurers often classify flood risks according to different sources and different scales, it could be worth speaking with a number of providers.
Again, this presents an opportunity to shop around for an affordable price on the level of cover you need.
When choosing a home insurance policy with flood cover, it is a good idea to check if it offers enough cover to completely repair or rebuild your home after a flood. Two common types of home insurance policies in Australia are:
| Total Replacement Policies | The insurer pays you the cost of repairing and/or rebuilding your home to the same size and standard of what it was prior to the damage. |
|---|---|
| Sum-Insured Policies | This type of policy offers you a set amount of money in the event of a successful claim. This type of policy can incur lower premiums depending on the pre-agreed sum-insured amount, but if underestimated, the payout may not necessarily be enough to cover the full cost of repairing your home. |
If you’re considering your flood insurance options, it could be a good idea to review the terms and conditions of your cover by reading the PDS. If in doubt, you may want to contact your insurer to clarify the situation.
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