The flood catastrophe that struck Queensland and NSW in February and March last year is the most expensive insured loss event on record, at $5.76 billion and counting.

It’s now also the second most complained about event since the Australian Financial Complaints Authority (AFCA) was formed in 2018 – behind only the covid pandemic.

More than 2000 complaints have been registered in connection with the flood event. Two-thirds of complaints have been closed, with three-quarters closed by agreement or in favour of complainants. $12.9 million in compensation and refunds has been secured.

But these statistics only tell part of the story – each ruling is unique in the circumstances of the loss and how the insurance policy applies.

insuranceNEWS.com.au monitors all AFCA rulings and today highlights four recently published determinations from the flood event of last year.

Optional flood cover

The complainants’ property, built on piers within the Richmond River floodplain, was inundated on March 1, 2022.

The complainants say a creek overflowed partly due to the 1000mm of rain received during January and February 2022, and partly due to a king tide backing up the creek.

They provided several images and one shows what they refer to as an inland lake forming between the Richmond River and the new M1 highway. The highway acted as a barrier for the distribution of water and on March 1 water came from the Richmond River, flowing over the lake and then entering the home, reaching almost a metre above floor level.

The insureds lodged a claim on March 6, but Auto & General denied it based on a hydrology report that indicated the inundation was caused by floodwaters.

Flood cover is optional under the policy and the complainants acknowledge they did not take flood cover.

“The onus therefore on the complainants is to show the loss or damage occurred due to storm or rainwater runoff,” AFCA said.

AFCA accepts that initial inundation may have been from stormwater but says this was likely to have been below floor level and was unlikely to have caused damage.

AFCA says it is fair for the insurer to rely on the terms of the policy to refuse payment of the claim.

Click here for the full ruling.

‘Water’ covered

A self-storage unit was damaged during heavy rainfall on February 26 last year, and the owner claimed on the storage facility’s policy with QBE that covers customer goods.

The policy covers losses from storm, tempest and/or water, but excludes flood, and the insurer denied the claim on the grounds that the inundation was caused by floodwater.

An insurer-appointed hydrologist found the site is located within the Mooloolah River catchment, 150 metres from an unnamed tributary, and concludes the initial and maximum source of inundation was floodwater.

AFCA says there is no dispute water got into the storage unit and caused damage, but says the insurer has not proven it was flood. It says the peak period of rainfall occurred in the hours prior to the inundation, which would likely result in stormwater run-off from the flat concrete area in front of the unit.

While the unit was hit by flood waters, AFCA says the insurer cannot prove that stormwater run-off did not precede this and cause the damage.

“The policy provides cover for damage caused by water. There is no dispute water got into the storage unit and caused damage.

“The insurer has not shown floodwater entered first or caused the damage claimed. It is required to cover the resultant loss.”

Click here for the full ruling.

Same street, different cover?

The complainant holds several home and contents policies with IAG, and lodged three claims after inundation on March 1 last year.

In 2018 the insured had removed cover for flood and rainwater to reduce costs. The insurer sent certificates of insurance for the policies showing they now excluded cover for flood and rainwater run-off.

This was done at each renewal and the complainant did not ask for the cover to be reinstated.

The insured wanted IAG to provide more detail about how it calculated her property’s risk of flood, and why premiums for flood increased in 2018. She says the insurer offered affordable cover to others in the same street, and says it discriminated against her.

AFCA says the insurer has provided information to show that the complainant’s property is next to a large river, and that it would charge high premiums for flood cover because it is at risk of flood.

It says the insurer is not obliged to provide more detailed information as it is commercially sensitive. It also says other customers are not party to the complaint and the insurer could breach privacy rights if it provided information about what policies they bought and how much they paid.

AFCA says there is no evidence the insurer unlawfully discriminated against the complainant and it would not be fair for the insurer to accept her claims for flood damage.

Click here for the full ruling.

Drains didn’t cope

The complainants held a home and contents policy with Auto & General and lodged a claim after the property was inundated with water on February 27 last year.

The insurer accepts the inundation of the garage, which sits lower than the home, was caused by stormwater but says the inundation of the home was flood, which is excluded under the policy.

The complainants say the inundation of the home was from stormwater which was unable to flow into storm drains and the insurer is liable for the entire claim.

AFCA found that while the peak inundation was most likely caused by flood, the initial inundation to 100mm above floor level was caused by stormwater. The complainants supplied time-stamped photos and video in support of their account.

AFCA says the insurer must cover damage caused by inundation of the home to 100mm above floor level, and $2000 in compensation for non-financial loss.

“The complainants have endured a very difficult and challenging experience, made worse by the insurer’s handling of the claim,” AFCA says.

Click here for the full ruling.