Who is going to pay?
Here we go again - following the torrential rain in Queensland, the question of whether water damage to property is classified as storm or flood and therefore covered by your insurance policy - raises its head.
Insurers have always covered storm damage - wind toppling trees onto houses, lightning, hail, rainwater getting into roof cavities as drainage and guttering failing to cope - while excluding flood (with the exception of a few). In general flood is defined in policies as "the inundation of normally dry land by water escaping or released from the normal confines of any natural watercourse or lake, any reservoir, channel, canal or dam".
Insurance companies are going to extraordinary measures in the event of a water damage claim to justify their decisions, with the use of hydrologists interviewing the insured, asking what happened, where the water came from, what time it arrived and from which direction and if it was clean or dirty. Then some pay and some don't.
The question is; shouldn't all insurance policies cover flood? Isn't insurance about pricing risks rather than excluding them? Simple questions to answer, but who pays? By who, I mean should every consumer have their policy levied to take in this risk or should it be decided by using flood maps and conducting surveys? Should those who will possibly be affected be paying higher premiums? Those who aren't at risk of flood don't want to pay a premium for those who are.
Either way the insurance industry needs to find a solution. The publicity following events such as the current flooding in Queensland, where people find they have no cover for flood damage continues to tarnish their reputation. There will, I am sure, be plenty of people appearing on current affair programs happy to tell everyone how mean the insurance companies are. Their response is guaranteed to be ‘people should read their policy wording' - and who does that? It needs to be made clearer or just include the cover.
