What is home insurance with flood cover?
Flood insurance or flood cover is a particular feature of certain home insurance policies that’s intended to cover your home for damage caused by what an insurer defines as flooding.
Whether or not your home is covered depends on a number of factors, including the type of home insurance policy you have, and what is included or excluded in that policy. Flood cover could be:
- A standard inclusion—which means it’s included in the standard features of your policy for no extra charge.
- Available as an add-on feature—which means that you would have to ‘opt in’ for that type of cover and generally pay an extra fee.
- A notable exclusion—which means that it’s not part of your policy and you don’t have the ability to add it on.
If flood cover is a standard inclusion, your insurance provider might even allow you to ‘opt out’ to lower your home insurance premiums.
What does flood insurance cover?
What is and isn’t included as part of flood cover will ultimately depend on your policy. The two types of home insurance, being home building insurance and contents insurance, will provide cover for different things, often with limits and sub-limits applying. Some general inclusions for flood insurance are:
For home building insurance:
- Structural damage, such as to walls, floors and ceilings
- Costs associated with demolishing and removing debris (if necessary)
- Damage to fixtures like built-in wardrobes, kitchen cabinets and plumbing
- Damage to permanent structures, such as garages and sheds
- Repair or replacement of electrical systems, such as wiring, air conditioning and switches
- Temporary accommodation—if your home is unliveable due to flood damage.
For contents insurance:
- Damage to furniture, rugs and carpets
- Damage to electronics, such as TVs, appliances and computers (if damaged beyond repair)
- Damage to clothing, linen and other personal items
Some contents insurance policies may also cover high value items like jewellery and artworks, but how much you can claim for each item will generally vary and limits may apply.
If you’re renting and have contents insurance, it’s worth checking whether your policy provides cover for flood damage to your belongings, and if there are any coverage limits. While it will generally be your landlord’s responsibility to ensure the building you live in is covered by either their landlord insurance or by the body corporate’s strata building insurance, this policy will not cover your personal belongings if they’re damaged.
What does flood insurance not cover?
For home building insurance:
- Damage caused by gradual water seepage or rising damp—which can often lead to mould growth or structural damage
- Damage caused by general rising seawater or tidal activity
- Damage to swimming pools and their associated systems (i.e., filtration systems, pool pumps, solar heating)
- Damage to retaining walls and some other external structures
- Damage to fencing and gates, landscaping, plants, outdoor areas and driveways (this can vary depending on the policy)
- Damage due to stormwater runoff, depending on how the insurer distinguishes between storm and flood-related damage (this may instead be covered under storm insurance)
For contents insurance:
- Losses due to mould, mildew or gradual water damage
- Loss of cash, collectibles and antiques (unless specified in your policy)
- Damage to items stored in non-secure areas (i.e., sheds or underneath the house)
- Damage to vehicles, such as cars, motorcycles and boats (a separate insurance policy like car insurance might provide cover for damage caused to your vehicles by flooding)
How much does home insurance with flood cover cost?
The cost of home insurance with flood cover can vary widely due to your policy and a range of different factors, including:
- Where your property is located and the risk associated with it becoming flooded or exposed to water damage—including the expected depth of the flooding
- The estimated costs to repair or replace the insured building and/or items
- The amount that your property and possessions are insured for (if insured under a sum insured amount)
- Your policy’s excess amount (the amount you need to pay when making a claim). You can potentially lower your premiums by raising your excess amount, however, you would need to pay this higher excess amount in the event that you need to make a claim
- Any other optional cover features you may have (i.e., portable contents, accidental damage, motor burnout insurance etc.).
Does flood insurance cover all types of flooding?
Even if you have flood cover, you may not be covered in every situation. Different insurers may use different terms to explain what they will and won’t cover in relation to floods, which can cause confusion when comparing policies—especially when trying to figure out what you’re personally covered for. Your exact level of coverage will depend on your insurer and the policy you choose
Some insurers specify limits on flood damage coverage, meaning the amount you’re reimbursed for may not cover the full cost of repairing the flood damage to your home.
If you’re unsure about what your current home insurance policy–or a new policy you’re considering–covers in relation to flooding, you can check the Product Disclosure Statement (PDS) for more details, or contact the insurance provider directly to clarify what is and isn’t covered.
Does flood insurance cover ‘actions of the sea’ and erosion?
No, flood insurance does not typically cover loss or damage caused by ‘actions of the sea’. The definition of ‘actions of the sea’ can differ between insurers, but it generally includes rises in the level of the ocean or sea, waves, high tides or king tides and other actions or movements of the sea—not provoked by a storm or cyclone.
In the case of erosion or other earth movements, home insurance generally won’t cover loss or damage. Some providers may cover erosion if it occurs within 72 hours of and directly because of an insured event, such as a storm, earthquake or tsunami, so it’s worth reading your PDS and other policy documents carefully to see if you’re covered in this circumstance.
Is my home covered for flood damage?
When it comes to defining what is—and isn’t—considered a ‘flood’ under home insurance, where the water comes from often matters. To give an idea of what’s typically covered across the market, Canstar Research reviewed the home and contents insurance policies in our database and found that all policies covered damage caused by rainwater run-off. Other events commonly covered as standard included:
- Flash flooding due to heavy rain
- Flooding from a natural water course (e.g. river or creek)
- Flooding due to a release from a catchment area (e.g. a dam).
Just under half of all policies offered standard cover for flooding due to a storm surge (i.e. an increase in sea level and waves due to a storm or cyclone), while none included cover for flooding due to general rising seawater or tidal activity.
Things become slightly more complex when damage is caused by flash flooding from rivers, creeks, drains or heavy rain. In the event of flash flooding, the source of the water seems to be what’s important to insurers. Where flooding or damage is attributed to a storm, another question providers may ask is how soon after the storm the flooding occurred. Even if your home and contents insurance doesn’t cover flood damage, you may still be covered for damage caused by storm or water damage.
Whenever you’re thinking of taking out insurance, be sure to read the information provided in the PDS, and to clarify what is and is not covered in the event of any type of water damage.
Is flood cover mandatory?
No, home insurance providers have no obligation or requirement to provide cover for flooding. Following the 2011 Queensland floods, the Federal Government put forward the idea of making flood cover a mandatory part of insurance policies, and specified a new, standard definition of a ‘flood’.
According to the Insurance Council of Australia, the official definition of flood is: “The covering of normally dry land by water that has escaped or been released from the normal confines of: any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or any reservoir, canal, or dam.”
Flood cover was not made mandatory, so it’s not compulsory for providers to include cover in their policies. At the same time, many insurance companies now only offer policies that do include flood cover, which has seen home insurance premiums increase in certain areas (e.g. floodplains).
Before committing to a particular policy, consider how flood-prone your area is, and whether or not getting flood cover as part of your policy is worth paying a potentially higher premium.
Why is home insurance with flood cover important?
Flood water can potentially cause serious damage to your home, as well as the possessions inside it. This could mean repairing or replacing costly structures, fixtures and/or personal items. Home insurance with flood cover can help give you some peace of mind that you’ll be covered if your property becomes affected by flooding. It’s important, however, to confirm with your provider about what you will and won’t be covered for in regards to flooding.
Can you add flood cover to your home and contents insurance?
If your insurance policy does not include flood cover as standard, you may be able to add it as an optional extra, either by updating your policy through your insurance provider’s online portal, or by contacting them directly. If you do this, there are a few things to keep in mind.
Firstly, the cost of your premiums is likely to increase, and secondly, the cover is unlikely to kick in immediately—meaning you’ll need to wait for a certain amount of time (an exclusion period) before coverage will begin. If you’re considering adding flood cover to your policy, then it’s important to confirm how any relevant exclusion period will apply with your provider.
Can I get home insurance in a flood zone?
This will depend on the area you live in and your chosen provider. Some insurers may offer home insurance to those in flood zones, while others may choose not to due to the perceived risk of flooding and potential increase of flood-related claims.
If you live on a floodplain or in a flood-prone area, it’s all the more important to compare your home insurance options to ensure that you’re covered, while still having a policy that’s good value for money.
When should I get flood insurance?
Flood cover can be taken out alongside a home and contents insurance policy, whether it be as a standard inclusion or an optional extra. This should usually be done when first taking out a policy, as some flood cover may come with an exclusion period before you can make a home insurance claim related to flooding.
How can I find a good deal on flood insurance?
To find a high-value policy when looking to insure your property against floods, it’s a good idea to shop around and compare. As flood cover is sometimes not included within home and contents insurance, it’s important to check exactly what your policy covers you for.
If you’re in or near a flood zone, you may have difficulty obtaining flood cover, or have to pay a higher premium or a flood excess (an additional excess charged if you make a claim related to flooding), depending on the perceived risk level. However, since different insurers may classify flood risk differently, it’s worth comparing your options.
When choosing a home insurance policy with flood cover, you may want to check if it offers enough cover to completely repair or rebuild your home after a flood. Two common types of home insurance policies in Australia are:
- Total replacement policies: The provider pays you the cost of repairing and/or rebuilding your home to the same size and standard of what it was prior to the damage. These types of policies aren’t as common and are usually more expensive.
- Sum-insured policies: Offers you a set amount of money in the event of a successful claim. This type of policy can incur lower premiums depending on the pre-agreed sum-insured amount, but if underestimated, the payout may not necessarily be enough to fully cover the cost of repairing your home—potentially leaving you underinsured.
If you’re considering your flood insurance options, it could be worth reviewing the terms and conditions of your cover by reading the policy’s PDS. If in doubt about whether you’re covered or not, you may want to contact your provider directly to clarify the situation.
How do flood insurance claims work?
Generally, you should start the claims process as soon as you and your household members are safe and there’s no immediate danger. Contact your insurance provider and report what has happened, including photo and video evidence of the damage to your home and/or belongings.
You may need to keep the damaged items, so don’t discard them until your insurer tells you to—they may need to assess them as part of your claim. They’ll generally also send someone out to your property to assess the claimable damage.
Can renters and tenants get flood insurance?
Renters can usually purchase flood cover as part of a contents insurance policy to help protect their belongings. Taking out cover for the building and physical structure/s, however, is the responsibility of your landlord.
