Property owners in central NSW who say their severely damaged home was covered under their policy’s tsunami benefit have lost their claims dispute. 

The complainants lodged the claim after alleging that “two fast flowing waves of storm water” in the early morning of November 14 last year wiped out their home and devastated properties in a nearby town.

IAG acknowledged the extent of the damage to the property and local community but declined the claim, saying that the damage was due to flood/rainwater run-off, which was excluded from the policy’s coverage. 

A report from an insurer-appointed technical assessor concluded that the waves of water were due to heavy rain the previous night, with approximately 120mm recorded within a short period.

The assessor reported that the water, mixed with mud, remained on the property for over 12 hours and that there had been no evidence of “top-down” inundation by a storm. The report also assessed the home as a total loss.

The claimants provided no evidence to refute the expert’s findings and acknowledged that the policy did not cover floodwater damage. However, they argued that a storm had caused the waters and that the policy, which included tsunami and storm, covered the damage.

The Australian Financial Complaints Authority (AFCA) panel said the tsunami cover was not applicable to this case.

The panel acknowledged that the policy did not explicitly define tsunami, but based on the Macquarie dictionary definition, it was interpreted as a “destructive sea wave or series of waves”. 

AFCA determined that the distance between the complainant’s property in central NSW had been far too great for the waves to be caused by seawater and agreed with the insurer’s findings that it had been caused by excessive rainwater run-off, which had flowed over the ground. 

“The panel accepts the event that caused damage cannot fairly be described as a tsunami, given the information shows the water that caused the damage was rainwater, not sea water,” AFCA said. 

“The panel empathises with the complainants given the loss they have suffered.

“However, as the cause of damage, rainwater run-off, is not covered under the policy, it is fair for the insurer to decline the claim.”

Click here for the ruling.