Australia: Queensland’s flood disaster highlights wide cover gap

However, losses could have been even greater. An early estimate from the ICA suggests 50% of commercial businesses didn’t have flood cover and 4% of domestic properties weren’t covered. Nationally, 7% of households don’t have flood cover.

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Insurers take different approaches to flood cover in Australia: some make flood cover a compulsory part of taking out a household policy; some include flood as a standard inclusion, but allow the policyholder to remove it, called opt-out flood cover; others cover flooding up to low defined values – for instance, damage of A$15,000 or less; while other insurers will not cover flood under any circumstances.

One option for policyholders is to claim through storms as insurers see rainwater runoff as part of storm cover.

“Most policies include storm cover,” said Insurance Council of Australia chief executive Rob Whelan. “Where flood cover was not purchased, it will typically be tested by the insurer through an independent hydrology process. This will determine if the inundation that caused the damage is to be classified as flood water or as storm water.”

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