A Lismore pizza store owner whose restaurant was flooded in February last year has won a claims dispute with her insurer after showing the initial inundation was caused by stormwater. 

The complainant says stormwater entered her business several times between 10pm on February 27 and 4am on February 28, reaching a height of 100mm before it was overwhelmed by floodwater. 

Recordings showed that upwards of 351mm of rain fell in a 12-hour interval between 7pm on February 27 and 7am on February 28, with the strongest intensity occurring around 12:30am. 

AIG Australia declined the claim after relying on a report from a hydrologist, referred to as WT, who raised doubts as to whether the stormwater would have been high enough to reach the building’s floor level.

WT reports that stormwater that came from higher elevations towards the restaurant’s location would have been directed towards the B Creek drainage system, which reached upwards of 9.5m Australian Height Datum (AHD)

WT acknowledged that there likely had been “significant stormwater runoff in the restaurant’s vicinity” but did not believe that it reached a height to impact the business, given that its floor level had been 12.09m AHD.

The hydrologist reports that the peak level of floodwaters from a nearby river at around 3am had been 14.36mAHD, matching the estimated inundation within the restaurant. 

However, the claimant highlights a separate report from WT, which had been commissioned for a claim by a local shopping centre landlord, that reported at least some level of stormwater had entered the property.

The insured also referenced CCTV images and footage that she says shows a stormwater pit outside the restaurant incapable of coping with accumulated water and causing water ingress well before the floodwaters hit the business. 

AIG argues that the footage shows the water draining into the pit before being discharged into B Creek. It says that if the ponded water had been stormwater backup, it would not have been emptied into the pit.

The insurer’s loss adjuster considered the footage “clear evidence of where the stormwater runoff entered prior to flooding”. WT responded that “flood” was the proximate cause of water entry, with the initial inundation “a result of flood water escaping the confines of [B] Creek”.

The Australian Financial Complaints Authority (AFCA) panel says it is satisfied it is “more likely than not that the restaurant was inundated by stormwater runoff before floodwater”. 

AFCA says the CCTV footage showed that on multiple occasions, water levels rose to the point of submerging the business footpath and road and that by 10:48pm, water had entered the restaurant.

The panel found that by 12:20am, water ingress had continued to increase, and at 12:24am, water “poured into the restaurant” after a person stood on and moved a sandbag protecting the road on the building’s entrance side. 

It concluded that this damage occurred hours before the nearby river flooded and severely inundated the business. 

“WT’s report dated August 9, 2022 indicates the stormwater inundation would have reached up to 100mm,” AFCA said.

“While that report was not specific to the restaurant, the CCTV imagery shows the restaurant experienced stormwater ingress.

“In the circumstances, and in the absence of any other evidence on the level the stormwater inundation reached within the restaurant, the panel is satisfied that it is reasonable to require the insurer to cover the claim based on a 100mm inundation.” 

Click here for the ruling.