A broker who represented their client, a self-managed superannuation fund, in a dispute over a claim for storm water damage has failed to persuade the complaints ombudsman that the loss was not caused by flood. 

Flood is excluded in the QBE-issued business pack policy and the insurer had declined the claim. The policy excludes flood damage unless the optional cover for flood is elected. 

The broker lodged the claim on behalf of the client in March last year, after a severe weather event in Queensland in the previous month caused damage to the fund’s tenanted commercial building. 

In submissions to the Australian Financial Complaints Authority (AFCA), the broker said the property was affected by intensive rainfall between February 21 and 27 and referenced the Insurance Council of Australia describing the event as a “rain bomb”. 

They said continual rain overwhelmed the local drainage system, causing the storm water runoff to inundate the property prior to the arrival of any flood waters and argued the policy provided cover for the initial inundation. 

The complainant and QBE agreed the property is within the floodplains of a creek and the property was inundated by flood waters at some point during the weather event which lasted several days. 

However, QBE determined the loss was caused by flood after a hydrologist it engaged to inspect the damage reported a list of findings, leading the insurer to form the opinion that flood water inundated the property and it is entitled to deny the claim as “flood” is specifically excluded in the policy. 

The hydrologist found the property has a floor level at 1.83 metres Australia Height Datum (AHD), which is a low point in the street. AHD refers to the elevation from the ground of any object, relative to a reference point and in Australia this reference point is sea level which is taken as 0 metres AHD. 

The hydrologist also found the street level at the property is 1.7 metres AHD, the property is about 70 metres north of the creek and it is within the extents of the river, creek and storm tide inundation events. 

The AFCA panel agreed with the complainant that the hydrologist’s report lacks details and does not consider the direction of water and specific circumstances. It also agreed the report could have provided more information as to how the storm water systems are “expected to have a response time of about 1 hour”. 

But the panel determined QBE had established the inundation was “most likely” due to flood. 

The ruling says “based on the available information, the panel is not satisfied storm water runoff by itself was capable of causing the inundation”. 

“Most likely, the initial inundation was caused by a combination of rainwater run-off around the property and flood water from the nearby creek. The inundation meets the policy definition of flood,” AFCA said. 

“When floodwater is mixed with water from other sources (such as rainwater run-off) it is established law this is considered floodwater.” 

Click here for the ruling.