Flood insurance claim: DENIED

It has been a very wet summer in Queensland and we have seen flash flooding all over the state, including recently in Townsville and Mackay.  When these types of issues arise, it is always imperative to check that you are properly covered with your insurance.  In planning for the worst, many people have Residential or Business Insurance Policies which provide coverage for damage to property caused by floodwater either through the standard inclusion or non-standard inclusion, opt-in at customer request.

Pursuant to the Insurance Contract Act 1984 (Cth) section 13, insurers must act in good faith whereby specifically advising any unusual part of the policy which would result in a claim being refused, acting swiftly and reasonably in deciding any claim.  This is due to the insurer having a greater understanding of the risks being transferred, more negotiation leverage, and insurance law expertise.

Once a claim has been lodged, the insurer requires further investigations to be conducted to assess the extent of the flooding on an individual property basis.  In Australia, the term “flood” refers to the covering of typically dry ground by water that has escaped or been released from the regular bounds of:-

• any lake, river, stream, or other natural watercourse, regardless of whether it has been altered or modified; or
• any lake, canal, or dam.

In accordance with the Insurance Council of Australia, 96% of insurance claims are accepted.  However, they have advised that the most common reasons for the denial of an insurance claim are as follows:-

1. Failing to maintain your property or Damage not caused by disaster.  Insurance coverage will only cover damage produced by an insurable incident, not pre-existing harm and your claim may be turned down or affected because your property has not been maintained properly to reduce the risk of damage.
2. Non-disclosure.  You are obliged to tell the insurer about anything that might affect your risk when you take out or renew an insurance policy.  Not revealing important facts, such as neglecting to declare appropriate insurance claims, criminal offenses, or existing damage, may affect your ability to claim on your policy.
3. Conditions and responsibilities.  You may not have met conditions outlined in your policy.
4. Policy exclusions.  Insurance policies contain a list of exclusions outlining specific situations, circumstances or events your insurer will not cover you for when you make a claim.
5. Cancellation of your policy.  Usually, if your policy has not been renewed, has been cancelled or you have not paid the premium, you will not be able to make a claim.

Each individual insurance policy is different and it is extremely important that you understand what things you are covered for and what you are not.  When obtaining insurance, especially in an area such as Mackay, it is imperative to check with your insurance company to ensure that you are covered for flood damage, storm damage and cyclone damage.

If your claim has been refused there are several options available to you.  Complaining to the insurers Internal Dispute Resolution or the General Insurance Division of the Australian Financial Complaints Authority (“AFCA”); or applying to the Court against the insurer.

If you have any questions or concerns, please contact our experienced and dedicated property, land, conveyancing and litigation solicitors at Macrossan & Amiet Solicitors.