Disaster Legal Helpline
Disaster Legal Helpline
Last updated: November 2020
The information set out on this page is intended as an introduction only and should not be relied on in place of legal advice. Each individual’s entitlements will depend on their circumstances and the particular terms of their insurance policy.
Maybe. Your insurance policy is your contract with the insurer, and it says when, how and what the insurance company must pay for. Most policies say that the insurance company will pay for damage caused by floodwater. You may have been given an option by your insurer as to whether to pay for, or opt out of, flood cover. If you don’t have flood cover you will probably only be covered for damage from rainwater or stormwater.
Your policy will explain this difference (which reflects the ‘standard definition’ of flood imposed by the Insurance Contracts Act 1984 (Cth)), but generally:
You don’t need to decide. Insurance companies get reports from experts, such as hydrologists, to work out if damage was caused by rainwater or floodwater. The expert’s report builds a picture of the events that led to the damage. It will assess the direction the water flowed, whether the water came from a river or from stormwater run-off, and what level the rainwater would have reached on its own. The report might not be conclusive as its findings may be based on false assumptions or be different to reliable eyewitness reports or video evidence.
In this case, if you are not covered for floodwater damage, the insurance company may reject your claim. Sometimes the decision will be correct, but sometimes it may not.
There may be arguments the insurance company has not considered, for example:
The law says that the insurance company must tell you whether or not it will cover your home against flood damage, and that it must do so before the policy is taken out or before it is renewed.
If this was not done, then the insurance company must pay for flood damage. This is called 'standard cover'. For example, standard cover applies if you paid the premium at the office and the policy was mailed afterwards. However, if you get the policy in the mail, and a year later you renew the policy, standard cover will not apply once you renew. This is because you got documents telling you that the insurance company did not cover you for flood before you renewed the policy.
If your claim is rejected by your insurance company, you may be eligible to have it reviewed for free by the Australian Financial Complaints Authority (AFCA) .Your insurance company must follow the AFCA decision.
You can still take other action if you are not happy with the decision. The insurer must tell you if your claim is eligible for review by AFCA (and you can check this with AFCA directly). The scheme has two steps:
If you are unsuccessful at AFCA you can still take your matter to court. You must start your claim within six years from when the claim arose (which may be six years from the date of the 'insured event' – that is, the storm or flood that resulted in the claim). Your policy may also say that you need to tell your insurer as soon as possible of the damage. If you do not do this within a reasonable time, your claim may be refused. It is better not to delay.
Collect detailed evidence about the damage. The more detail you get, the easier it is to show the cause of the loss. You should try to gather evidence such as:
Try to get eyewitness accounts of what happened first to neighbouring properties.
Some flood insurance cases are difficult, Victoria Legal Aid can give you advice about whether you need a lawyer.
Tel: 1300 792 387, Monday to Friday, 8 am to 5 pm
www.legalaid.vic.gov.au
Tel: 1300 663 464, Monday to Friday, 9.30 am to 4.30 pm
www.insurancelaw.org.au
Tel: 1800 931 678, Monday to Friday, 9 am to 5 pm
www.afca.org.au
Tel: 1800 466 477 or (03) 9629 6300 (legal advice), Monday to Friday, 10 am to 1 pm
www.consumeraction.org.au