Australia has seen a string of natural disasters recently, including floods, storms and bushfires. The following are some things for people who have suffered loss or damage as a result of natural disasters to consider if they are forced to lodge a home and contents insurance claim. We also explore your options if your home and contents insurance claim is denied.
Detailing the event that caused damage to your home and/or contents
As precisely as you can, write down details about the insured event which has caused the damage you are claiming for. Most policies do not simply pay for any damage suffered to your home or contents.
The damage that you claim must have been caused by an insured event like a storm, bushfire or flood. Notably, homes in many areas across Australia are not covered for damage caused by floods. Therefore, it is important that you identify, as specifically as you can, the exact nature of the insured event which has caused damage.
Flood vs stormwater damage – definitions in your policy are key
In the past, we were involved in cases for people that suffered substantial water damage following two significant water inundation events. The first was damage caused by stormwater run-off. The people we acted for reported that this initial inundation was clear and happened before the local river breached its levy. Later damage was caused by dark murky water and happened after the levy breached.
Under most insurance policies flood and storm water damage is defined differently. Flood is the escape of water from a known watercourse (a river, creek or dam) and stormwater run-off is rainfall which has nowhere to go, never enters a watercourse, and then causes damage.
In this case, we were able to get expert evidence from a hydrologist which supported that the early inundation (which was clear) occurred as a result of the storm event and the later damage (after the levy was breached) was caused by flood, as defined in the policies. For these people with flood insurance cover, we were able to at least get them some compensation for damage to floors, carpet and skirting boards and contents on the ground etc.
Sometimes, you will not know what has caused the damage (ie you notice a roof leak one day because the ceiling is stained). In cases like this, you usually must still work out what has caused the damage (ie a storm with heavy winds 2 weeks earlier) and make the claim on this basis. If the insurer doesn’t agree that the storm caused the damage, you will have to prove this.
Keep notes of all communications with the insurance company
Lodging a claim can be very frustrating, as the administrative processes at insurance companies are notoriously painful to deal with. This is the case increasingly at present, given staff shortages and a bunch of recent natural disasters which have insurers under the pump.
Take note of the conversations you have with your insurance company. Note down the things that they say and the information which you give them. Record:
- who it is you spoke to;
- on what day and at what time you spoke with them;
- what they told you.
Make sure you clarify and take note of what they tell you is the next action on your claim and when it will happen.
Call, email and call again
In many cases, you will speak to a different person each time you call the insurance company and your case manager will be “in a meeting” and you will often be told different things about your claim.
Therefore, we recommend that you follow up each call with an email to the case manager or claims team. We also recommend that you call the insurer regularly to request updates on your claim.
It’s also important that you continue to hassle the insurance company. This is particularly important for water damage claims if your house remains wet. The house must be dried immediately in order to avoid further damage, such as damage caused by mould.
This means you will need to call the insurer daily until they perform “make safe” arrangements at your home to dry it out. Make safe arrangements may include things like:
- tarps on roofs;
- secured damaged windows;
- isolating electric circuits;
- isolating plumbing connections;
- temporary fencing;
- installing industrial dryers/humidifiers, and so on.
Don’t give up!
You probably pay a lot of money each year for home and contents insurance and have done so for many years without having to make a claim.
These policies exist for reason and if you are entitled to a payment under a home and contents insurance policy you should not give up. You should be persistent.
It can be tempting (particularly at the time of an event which may be so catastrophic that may not be working and receiving an income), to simply accept a cash payment to settle your claim and let the insurer off the hook. But we recommend that you only accept a cash settlement if you are confident that it fully compensates you for everything you are entitled to.
Also, it’s important to ensure that you can replace the damaged items or do the work which needs to be done for the amount which the insurer offers. During natural disasters like floods and bushfires, there are a lot of claims at the same time and the demand for goods and services, including tradespeople, is at a peak which, in turn, forces up costs.
Beware cash settlements after an insurance claim
We strongly recommend that you carefully consider what it will cost you to repair or replace lost and damaged items before accepting any cash settlement from the insurer.
You should always get your own quotes to repair or replace items before accepting a cash settlement. Insurers engage large building companies and provide them with a source of ongoing work. For this reason, they often get discounts when it comes to quotes to complete repair work.
Also, these builders understand that they usually are not engaged to do the work, only provide the quote. Therefore, the quotes are often less than what you can replace or repair the items for yourself with local builders, particularly in the wake of a natural disaster when builders are very busy.
Do not sign a release or waiver from the insurance company
Insurers will often ask that you sign a release or waiver when you accept a cash settlement. It’s important to understand that if all they are doing is providing you with your entitlements under the policy, there is no reason for you to release them from liability and you should not have to sign these documents.
Further, if you do accept the cash settlement and sign a waiver or release, you can sometimes challenge and undo the release at a later date. That is, you can sometimes make further claims on your policy even after signing a release.
If you find yourself needing to get out of the release you signed, it’s crucial you seek legal advice from an insurance lawyer. In most cases, the insurer has no right to request you sign a release or waiver.
What to do if your home and contents insurance claim is rejected
If your claim is rejected, you will need to appeal the decision. It’s usually best that you get further reports, statements or quotes from builders or engineers to support the appeal.
The first step is usually an internal dispute resolution (IDR) complaint. After that, you may have to appeal at AFCA or in court.
Get help from an insurance claims lawyer
Completing your home and contents insurance claim may seem straightforward, however, our experience shows that insurance companies are adept at finding reasons to deny your claim.
We are highly experienced in fighting rejected insurance claims. Our team has significant experience and expertise, particularly with claims issues after a natural disaster like a flood, storm or bushfire.
2022 Australian floods – get help from a home and contents insurance lawyer
The situation facing many in country Victoria, NSW and Tasmania from the 2022 floods, and previously in Queensland and Northern NSW, is as bad as it gets. But we have done this before and we are here to help if you need us.
If you have lodged an insurance claim for flood damage (or another natural disaster) and you’re facing hurdles dealing with the insurance company or your claim has been denied, we can help. You can read more about these claims in our blog, “Your guide to flood insurance claims” or contact us for free advice.
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