Does home insurance cover you for damage from the sea?

Climate change is driving rising sea levels, presenting a risk for Australian properties on the coast.

According to CSIRO, the consequences of sea level rise will include “increased flooding of low-lying coastal, including tidal, areas and are likely to result in coastal erosion, loss of beaches, and higher storm surges”.

At the same time, CSIRO notes that the coastline is becoming more developed, with around 85% of the Australian population living within 50 kilometres of the coast.

So if you live on or near the coast, does your insurance cover you for damage from the sea, such as rising sea levels, coastal inundation, storm surges and coastal erosion?

Does home insurance cover ‘actions of the sea’, storm surges and erosion?

Home insurance providers do not typically cover loss or damage caused by ‘actions of the sea’. The definition of ‘actions of the sea’ can differ between providers, but it typically includes rises in the level of the ocean or sea, waves, high tides or king tides and other actions or movements of the sea.

Additionally, while there are a number of home insurance policies that cover flooding as a standard or optional inclusion, there are no policies on Canstar’s database that cover flooding due to a rise in seawater or tidal flooding.

The Insurance Council of Australia notes that ‘actions of the sea’ represent a “protection gap, where insurance coverage has limited availability due to the inevitable nature of the risk to exposed properties”.

Storm surges

Some providers do cover loss or damage caused by storm surges. A storm surge is generally defined as an increase in sea level that occurs because of the presence of a storm and strong winds.

Depending on the provider, storm surges may be covered as a standalone event or only when it occurs at the same time as a flood. Of the policies on Canstar’s database that cover flooding, 28 of them (or 30.8% of policies) cover flooding due to storm surges.

Some providers consider storm surges to be ‘actions of the sea’ while others do not, so it’s worth reading the policy documents carefully.

Erosion

Home insurance providers do not typically cover loss or damage caused by erosion or other earth movements by itself. Some providers may cover erosion if it occurs within 72 hours of and directly because of an insured event, such as a storm, earthquake or tsunami, so it’s worth reading your policy documents carefully.

How can homeowners protect themselves?

Before you buy a property, it can be wise to do your research into the climate-related risks you could face. You can speak to the local council about the potential climate risks. There are also online tools like Coastal Risk Australia and CoastAdapt that you can use to see how rising sea levels could impact your property in the future and its risk of coastal inundation.

In terms of insurance, many policies do not currently cover ‘actions of the sea’ like sea level rise and coastal inundation. Other policies will only cover storm surges or erosion in limited circumstances. If you are unsure what events you will or won’t be covered for, the best course of action is checking the policy’s Product Disclosure Statement (PDS), Key Fact Sheets (KFS) and Target Market Determination (TMD) carefully. You can also speak with the insurance provider for any questions you may have.

Climate Valuation also offers a tool that can give you an idea of how much climate change could impact the future value of your property and insurance premiums.

Cover image source: JM Travel Photography/Shutterstock.com.