Watch out! Your home insurance may not cover you for extreme rain damage any more

Fact Checked
Updated 12/10/2022
Watch out! Your home insurance may not cover you for extreme rain damage any more

Claiming for storm damage just got even more confusing.

Time to read : 3 Minutes

Watch Out Your Home Insurance May Not Cover You For Extreme Rain Damage Any More

Australia's Eastern Seaboard has been devastated by floods this year. Northern River communities have been particularly affected, with Lismore, Murwillumbah and Mullumbimby all getting smashed.

It's come with a hefty repair bill too. The Insurance Council of Australia (ICA) says it's been the costliest flood event ever and have priced it at $3.35bn.

Be aware: it's also led to a rather quiet change from insurers. Some have now changed their flood cover on home and contents policies to now include pluvial flood.

And that has some major implications for homeowners.

Okay, so what is a pluvial flood?

According to Zurich Insurance, "a pluvial flood occurs when an extreme rainfall event creates a flood independent of an overflowing water body."

  • In layman's terms, if your neighbour's place floods due to rain and yours gets damaged you aren't covered under some insurers.

  • It can also be considered a pluvial flood when a stormwater drain overflows onto your property.

  • So, in essence, heavy rain that leads to things like flash flooding and surface water.

    • Flash flooding is caused by the fast release of rain water.

    • Surface water is when city drainage systems over flow.

  • This type of flooding can happen anywhere, and could make your insurance useless in event of a flood.

  • Worse, it means that the line between what is storm damage or flood damage is no longer clear cut – making it harder to claim.

What does that mean for owners?

It means that you may be under-insured or not covered at all for extreme rain events.

Head of Placement at Hoonan Travis Wendt explains,

"If the water that comes from the sky inundates the property, pools on the ground, escapes that building and then affects the adjacent building, that’s now under the pluvial flood definition and now considered flood."

Many victims of this year's extreme weather have suffered a similar fate when insurers ruled their event a flood. In turn, thousands of people have been left under-insured or worse unable to claim anything at all.

Be aware: Basically, what we think of as storm damage could be called flood damage by insurers and not covered.

Now, what to do about it...

Yep, it's awful and it properly sucks but now that you know about it, you can do something about it.

  1. Read your terms and conditions and reach out to your broker or insurance company.

  2. Update or switch your policy that has the cover that you need.

  3. Key times that these type of changes occur are (a) when terms and conditions are updated and (b) when you renew – so be eagle-eyed.

The bottom line

Climate change is having a major impact on all our costs, and insurers are no different.

⛈️ Currently one in 25 homes in Australia are uninsurable and it is predicted to get worse.

👣 This doesn't mean we have to like it though, so vote with you feet and speak to your broker or compare cover to find the right home insurance if you're not confident that your current policy will pay out.

🏠 Some Aussies are taking the risk and buying into flood-ravaged areas in order to get a deal, showing just how desperate the property market has become.

The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions.