When La Nina hit in March, thousands of New South Wales and southeast Queensland residents were forced to evacuate their homes and businesses.
While heavy rain was anticipated, the true impact of the flooding that followed had an all too real impact on local communities in Eastern Australia.
Recovery efforts are underway, but for many getting back to ‘life as normal’ still feels like it won’t be until well into the future – particularly those that don’t have flood cover to fall back on.
It has been nearly a decade since a standard definition of flood was adopted to assist insurers and consumers in the aftermath of the 2011 Brisbane floods. Yet confusion over the term and what it means for risk protection in the event of a flood continues to flummox the public at large, especially for those who reside in low-lying areas that are most prone to such disasters.
Automatic flood cover is now included in standard home insurance policies unless the customer chooses to opt out. For commercial policies, flood cover is provided only if the insured opts for it.
Cost is usually the reason given by people who choose not to have flood cover. That’s all well and good if the day never comes when they need to make a claim. But the New South Wales/Queensland flood disaster has again demonstrated the risk of going without such protection.
The cost of reinstating a flood-damaged home or business will far exceed the cumulative cost of annual insurance premiums. And while the affordability of flood insurance is an issue, it should be recognised that the premium reflects the very high costs insurers face in returning a home or business to the state it was in before.
So what exactly is a flood cover and how does it protect you and your business?
The insurance industry defines flood as 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”.
Policies can differ in the level of cover that they offer. Even if flood damage is excluded, storm and rainwater damage could be included. These complexities can be confusing to navigate, but it’s important that if you’re paying for cover, you fully understand what’s in your policy.
While you will ideally never be in a situation where you need to make a claim, the day may come, so being prepared is your best option when it comes to protecting your business. The ongoing flood threat is very real, and ignoring it isn’t by any means the solution to ignore this.
For more information, or if this article has brought up any queries about flood risk mitigation cover, please don’t hesitate to get in touch with your insurance adviser. We can work with you to make sure you get the appropriate level of protection.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.