Flood insurance: what does your policy cover?

by Chris Lang on January 31, 2011

Flooded house Recent floods in Queensland got many people thinking about the potential damage to their property in case of flooding and whether or not they have the adequate insurance. These folks a worried for a good reason – if we take the damage caused by all the natural hazards (storms, cyclones, earthquakes, bushfires, etc), one-third belongs to flood.

But what does “flood” mean? It turns out flood can mean many things, because there can be many reasons for flooding.

Very intense yet short storms can cause a flash-flooding – they produce a large amount of water almost instantly.

Another type of flooding (riverine flooding) can occur when long rains cause rivers, creeks or dams to overflow.

The rise in the level of the ocean is the third cause of inundation, which may affect many coastal properties.

So yes, that’s all very interesting, however… anyone unfamiliar with their insurance cover should put the dictionary aside and read their insurance policy – because the way it describes flood will define whether or not you are covered.

Consumer alert: there isn’t one common definition for flood and every insurer describes it differently. As a consumer it makes your job harder because it becomes more difficult to compare various insurance policies, but that’s life and we better do the homework today than be sorry tomorrow. If, after reading the policy you still can’t work our what you are covered for, don’t hesitate to ring your insurer and ask.

But how do you know if there is any risk to your home?

By using flood maps. In Victoria we have access to planning maps online and they specify whether or not the property in question is located in a flood zone, or flood overlay. All you need to do is accept the terms and conditions on maps’ webpage and then do a search by property address. If a property is located in a flood overlay, the information will show up on a map, and it will mean that the property is in a greater risk of flood, because it was either flooded in the past, or is predicted to flood in the future.

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