Weathering Insurance
Newcastle Herald
Wednesday June 13, 2007
HERE'S a tip for lodging an insurance claim associated with the weekend's storm: don't mention the word flood.
Your car was not caught in the flood it was inundated by storm water. Your house was not flooded it was damaged by rainwater or storm water. You were not trapped by a flash flood you were trapped by a surge of storm water.It's not likely that your choice of words will determine whether an insurance company pays your claim, but avoiding the word flood is wise in conversations with insurance companies' claims departments. You see, our home and contents policies may not cover damage caused by flood but they are likely to cover damage caused by a storm and storm water.It may be, too, that the policy will not cover damage caused by a combination of flood and storm water.Your car went under? Relax. The Insurance Council of Australia told me yesterday that comprehensive motor vehicle insurance covers vehicles damaged by flood and storm water.So what's the difference between flood and storm water?The Australian Securities and Investments Commission in a report titled Consumer understanding of flood insurance in the year 2000 had this to say:"In general terms flood damage refers to the inundation of a property by water which overflows from a natural watercourse, while storm and tempest damage refers to the inundation of a property by water as a result of a storm."Both types of damage are usually linked to a storm in the first instance and often a property may be inundated by both water from the storm and water overflowing from a natural watercourse. However, for the purposes of insurance cover, it is important to understand that most policies: do not cover damage to a property caused by the inundation of water flowing from a natural watercourse; do not cover damage where the property is inundated by mingled waters from the storm and from the overflow of a natural watercourse (unless most of the damage is caused by stormwater); and do not cover damage where the proximate cause of the damage is another phenomenon, such as earth movement, even though this may itself have been caused by water from a storm."Proximate is direct or immediate, and damage can have more than one proximate cause. Even if just one of those proximate causes is not covered by the policy the insurance company may refuse to pay.NSW Legal Aid offers this as a definition of flood commonly used by insurers: "The inundation of normally dry land by water escaping or released from the normal confines of any natural watercourse or lake (whether or not altered or modified) or of any reservoir, channel, canal or dam."Legal Aid says that a watercourse that has had its boundaries significantly changed by humans might be held by the courts to be not a natural watercourse.Stormwater is the product of rainwater, and Legal Aid gives this as a typical definition used by insurers: "Rainwater shall mean: rain falling naturally from the sky including rainwater run-off over the surface of the land and including rainwater overflowing from stormwater drains and channels."But, Legal Aid warns, some insurance companies are changing their policies to say that floodwater includes overflow from stormwater drains.Those insured with NRMA Insurance, an IAG company, can relax. NRMA Insurance issued this statement late yesterday: "All NRMA Insurance customers affected during the Queen's Birthday long weekend storms will be covered for damage to their homes and cars where a valid policy is held."I phoned to clarify whether that statement applied to people whose homes had been damaged by water overflowing from a river, in other words floodwater. Yes, an NRMA Insurance spokesman said, there was no confusion at his firm, the damage at the weekend was caused by a storm.Let's hope the other insurance companies conduct themselves with as much goodwill and in such good faith.jcorbett@theherald.com.au
© 2007 Newcastle Herald