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How is Your “Flood” Insurance Policy?

If you live in Queensland or New South Wales, you probably know exactly what constitutes a flood and what doesn’t.

Well, an interesting case in New South Wales recently looked at the issue, in a matter that did not strictly apply to flood insurance as such.

The case involved an insured property located in New South Wales. The house located on the insured property was built in the 1920s and had been largely neglected in recent years. Following a battering of rain, the insured lodged a claim for water damage to the insured property as a result of the “storm”. In the policy, the term “Storm” was a defined as an atmospheric disturbance that could be accompanied by rain, hail or wind.

There was plenty of argy bargy in the Court about the term, but ultimately the District Court found in favour of the insurer on the following grounds:

  • The onus was on the insured to prove the water damage was caused by the “storm”;
  • The definition of storm under the policy required there to be more than rain, it required there to be proof of an atmospheric disturbance;
  • The insured failed to prove an atmospheric disturbance and had simply proven “rain”;
  • Further, the insured had failed to prove the damage to the insured property had been caused by a “storm” (or indeed “rain”). In this regard, the absence of expert evidence meant the Court could not make any finding on “causation”.

The case later ended up in the Court of Appeal, where the Court upheld the District Court’s thoughts on the matter.

The take home message is simple! Insurance companies will fight to the end to not pay a claim. So, next time the rain is battering down on your place, or preferably before, dig out your policy and make sure you are covered for “flood” and make doubly sure that the definition of a “flood” is one that you’re comfortable with.