For those that have home and contents insurance, there is at least some comfort in knowing that some of the damage to property damaged by flood or stormwater will be replaced. For those without insurance, the Government’s flood insurance payments announced in mid-October 2022, may assist in some small way.
The current situation facing many in country Victoria, NSW and Tasmania, and previously in Queensland and Northern NSW, is dire. We can only imagine the anguish that comes with watching helplessly as rising water levels damage your home beyond repair.
We have helped many people claim on home and contents insurance policies or challenge the decisions of insurance companies who reject claims following a flood or other natural disaster. The following are a few things we have learned along the way that might help.
Check your home and contents insurance policy regularly
Most insurance policies renew annually, and we should use this as a chance to renew them and check that they are still the best for us. This will include checking that the premiums are affordable (there may be room for negotiation) and also checking that the insured amounts are adequate.
Increasingly, we understand that a natural disaster may impact us before it actually does. If you are in an area that is subject to natural disaster warnings, it’s a good idea to call your insurance company in advance and check that your home and contents insurance policy provides the type of cover you need. You may be able to make changes even as the disaster approaches.
Once you have the right insurance in place, you need to maintain it. Use these three tips to ensure your home and contents insurance is appropriate before a flood or other natural disaster hits.
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Check that your home and contents insurance policy is current (it hasn’t expired)
To be able to make an insurance claim, you must be covered under the relevant policy at the time of the insured event. If the policy has lapsed, you will not be able to make a claim.
This sounds obvious, but it can be very devastating for an individual to find out that their insurance policy has lapsed without their knowledge after a natural disaster or insured event. We find it happens most to people that have multiple insurance policies with one or more insurer (eg. boat, car, caravan, investment properties).
So, it’s important to keep track of the various insurance policies you may have and ensure they are always up to date.
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Check that the insured amounts for your home and contents are accurate
Most people insure their home for an agreed amount (not complete replacement). They insure their home for the amount that the insurance company recommends when the policy starts or an amount which they can afford.
We find that the insured amount is often not enough and is generally based on a person’s understanding of how much their home is worth, compared to how much it would cost to rebuild or repair. It’s important to understand that in many cases repairing a water-damaged home can cost more than rebuilding it.
Each year the insured amount increases, but it often does not increase in line with the cost of rebuilding or repairing the home. This is particularly so in recent years given the increased costs of building and repairing homes during a pandemic and due to inflationary pressures. Therefore, it’s always good to make sure that the insured amount is accurate when you get your renewal notice. Remember, you can always increase the insured amount. You don’t have to automatically accept the insurance company’s figure.
Also, under some policies, the insured amount includes the cost of demolition or cleanup of the property. That is the insured amount should not just be the cost of rebuilding the property, but also the cost of demolishing it and cleaning up the property prior to rebuilding starts. This can often be a significant additional expense which should be included in the insured amount.
If you have a complete replacement policy, you only have to worry about this with respect to a contents claim (that is, the insurance for your personal possessions like furniture, whitegoods, clothing etc).
We recommend that every 12 months or so, you do an inventory of contents items in your home (and take photos of each room - see below) and give some thought to how much it would cost to replace them. You can then make sure that the contents insured amount on your policy is adequate. This should be done regularly if you are in a disaster-prone area.
Similarly, if you are about to experience a natural disaster, you should go through this process and see if the insurer will allow you to increase the insured amounts (do this before the insured event as you can’t do it after).
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Check the insured amounts for any portable or valuable items are adequate
Many policies carve out the replacement costs of valuable items such as jewelry, electronic equipment, artwork and portable items (bicycles, golf buggies, laptops). If you have items of this nature in your home, it’s important to let the insurer know that you have them and make sure they are covered for the right amount in case they need to be replaced.
Take photographs
If you are in an area that is subject to an emergency warning like a bushfire, a big storm or flood, or your area is prone to disasters, take as many photographs of your home and contents as possible. You should do this annually and particularly if there is a natural disaster approaching.
Also, if your home is damaged, once you return to it, take photographs of the state of the house that you return to, including contents within it before the clean-up. Sometimes these can be used to confirm the damage to property immediately after the flood or other natural disaster.
Notify your insurance company of your intent to claim flood or natural disaster damage
You should notify your insurance company of your intention to lodge a claim, as soon as possible after the event. You can do this over the phone or online. Do not wait until you can find all your paperwork.
After lodging the claim, when you are able, you can provide further materials in support of your claim by completing the relevant claims forms and following your specific insurer’s claim requirements.
You can read more about this in our blog, “How to optimise success of your home and contents insurance claim”.
What is covered in flood insurance?
Flood insurance cover is provided under many home and contents insurance policies, but not all. Some people that live in flood prone areas might have trouble getting home and contents insurance cover that includes flood, or if they can get flood cover, it may be too expensive to maintain.
If your home and contents insurance policies cover you for flood, there are usually no limits on what can be claimed if you are flooded and you can lodge a claim for damage to your:
- Contents (ie, furniture, personal items, clothes, whitegoods, rugs, curtains, carpet, light fittings); or
- Home – all damage to your home, including structural and cosmetic damage.
Also, in some cases, your policy will also cover the costs of some additional items, like the cost of temporary alternative accommodation (for up to 12 months) and lost or spoiled food and toiletry items.
Your options if your flood insurance claim is rejected
If your claim for damage after a flood is rejected, you will have appeal options. The first appeal option is usually an internal complaint or IDR Complaint which is made directly to the insurer. In response to an internal review, an insurer will usually have another department within the insurance company review the decision and make a new decision on the claim.
If after the internal review, the claim remains rejected, you will have appeal options at the Australian Financial Complaints Authority (AFCA) or in court.
Strict time limits apply to complaints at AFCA or in court and we recommend that you seek advice as soon as possible.
Get help from an home and contents insurance lawyer
We provide free advice to people needing assistance or guidance in relation to their home and contents insurance. If your insurance company is giving you the runaround or has rejected your claim or made any other adverse decision, contact us for free advice.
Contacting Berrill & Watson
📞 Melbourne: 03 9448 8048
📞 Brisbane: 07 3013 4300
📞 Anywhere else in Australia: 03 9448 8048
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We are Australia's best-value superannuation/insurance law firm. Other law firms charge nearly double (& sometimes more than double) what we charge. So, if you get a quote from them, or have a cost agreement, ask us what we will charge you.