Storm surge insurance explained

What is storm surge insurance?

Storm surge insurance is a form of home and content insurance coverage that protects your property against damage caused by storm surges. A storm surge in insurance terms is generally defined as an increase in sea level and associated waves because of an intense storm or cyclone, and is usually offered as a feature on a home insurance policy. While storm surge insurance is fairly easy to obtain—at the time of writing, for example, approximately 45% of the policies on Canstar’s database offer it—it’s common for certain policies to not include coverage for ‘actions of the sea’, such as normal tidal movements like king or high tides.

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 generally includes rises in the level of the ocean or sea, waves, high tides or king tides and other actions or movements of the sea—not provoked by a storm.

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”.

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 rising seawater from a tidal surge or king tide.

Storm surges

Some providers do cover loss or damage caused by storm surges. 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, just under half additionally offer cover for 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 your policy’s Product Disclosure Statement (PDS) carefully or contacting your provider directly for more information.

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, do your research into the climate and natural disaster-related risks you could face in your desired location—especially if you’re looking to buy in or around a coastal region. Speak to the relevant local council or LGA about these potential risks; ask for information on erosion rates in the area, coastal management plans, and any existing and planned coastal protection structures in place.

Seeking advice from a qualified structural or geotechnical engineer who specialises in coastal areas can also help with site-specific assessments. 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 home insurance, many policies do not currently cover ‘actions of the sea’ like rising sea levels and coastal inundation. Other policies will only cover storm surges or erosion in limited circumstances. If you’re unsure what events you will or won’t be covered for, the best course of action is checking the policy’s PDS, Key Fact Sheets (KFS) and Target Market Determination (TMD) carefully. You can also contact your insurance provider directly with 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.