Flood

Flood Insurance

A typical Definition of Flood is below.

Flood means the covering of normally dry land by water that has escaped or been released from the normal confines of any of the following:

1. a lake (whether or not it has been altered or modified);
2. a river (whether or not it has been altered or modified);
3. a creek (whether or not it has been altered or modified);
4. another natural watercourse (whether or not it has been altered or modified);
5. a reservoir;
6. a canal;
7. a dam.

Some insurers, generally from the hard to place market, have a broader exclusion than above.

At all times, please refer to your PDS and Policy Wording for the Flood Definition that applies to your individual policy.

Proximate Cause

The Doctrine of Proximate Cause is a fundamental basis of insurance. The cause of loss is crucial for determining if coverage applies or does not apply.

If a Flood exclusion is within your policy, it is important to note the following principles that insurers adopt.

1. If the water originated, from a natural watercourse, the flood exclusion applies.
2. If the flood water from the natural watercourse, mixes with rainwater run off from the surrounding land catchment areas and the combined water causes damage, the flood exclusion applies.
3. If the water escapes from a natural water course, flows across land areas and subsequently causes damage, the flood exclusion applies. In these circumstances the origin of the water remains from a natural water course.
4. If the water escapes from a natural watercourse, flows across land areas entering a storm drainage pipe (not a natural watercourse) and finally the water escapes from the drainage pipe to cause damage. The proximate cause is water from a natural watercourse and the flood exclusion applies.
5. The time period during which the flood waters rise, either fast as occurs with a flash flood or slow as occurs in outback rural areas over a period of days, is immaterial. Some flood waters will rise and fall slowly whilst other events occur rapidly perhaps during a brief period of several hours. The length of time of water remains in the area is not a significant factor in a determination of a flood exclusion. The paramount consideration is the origin and source of water, not the length of time remains, in the area.

[Bultitude, A. 2001, The Claims Manager (home and Contents), Insurance Claims Publications, Rosebery NSW.]

Flood Planning and Mitigation Guide

To assist we provide a Flood Planning and Mitigation Guide from one of our insurers – Chubb Insurance