A NSW property owner whose home was inundated by a combination of stormwater and floodwater will not be covered for her losses after a dispute ruling panel backed her insurer’s decision to decline the claim.

The insured says her home was damaged by water from an “unprecedented storm” on February 28 last year. She describes being woken by the storm at around 5am and noticing “huge volumes” of rainfall pooling around her porch, back yard and laundry.

The claimant says water entered the property around 5:45am and it had been “clear and not muddy”.

She blamed the local council’s poor drainage infrastructure, saying that the extreme conditions overwhelmed the system and could not prevent the water from inundating her home.

However, Auto & General declined the claim after relying on a report from its hydrologist, referred to as WM, who says the stormwater combined with floodwater at the time that it inundated the home.

WM estimated peak water levels at the property had reached 3.95m AHD (Australian Height Datum), around 40cm above its floor level. The hydrologist confirmed the nearest rain gauge recorded upwards of 520mm of rain in the 24 hours before its daily recording at 9am.

The report says peak water levels from Brunswick River, located 550m north of the insured property, were recorded at 5m AHD at 7am, but water levels likely went higher due to additional downpours during the flooding.

WM says the floodwaters reached an estimated height of 3.35m AHD at the property before combining with the stormwater to flood the home.

The insurer says the homeowner had not taken out an optional flood policy, which would have provided cover for the loss.

The complainant argues that the stormwater inundation occurred before the floodwaters arrived and that further consideration should be given to the “failure of the local stormwater infrastructure”.  

But the Australian Financial Complaints Authority (AFCA) panel says WM’s report shows there had been a pathway for the floodwater to enter the property.

The panel notes that the complainant acknowledged water levels had only been 0.2m above the ground level at 6am and had not entered the property. It says this indicates that a “combined effect of the storm and the flood” caused the inundation.

“The panel acknowledges stormwater run-off can sometimes be distinguished from flooding,” AFCA said.  

“Here, the panel accepts a combination of rain, stormwater run-off and floodwater co-mingled to inundate the complainant’s home.

“The panel further accepts this would not have happened without the combination of these elements.”

AFCA says established court precedent confirms that when a covered event and excluded event combine to cause a loss, and the influence of the events cannot be separated, "the excluded event prevails".

“The policy covers damage caused by rain and/or stormwater run-off. It does not cover damage caused by a flood.

“The policy does not respond as inundation in these circumstances is properly defined as a flood, which the policy excludes.”

Click here for the ruling.