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How Flood Insurance Works: What is flood insurance?

Australia’s historical records show that natural disasters have always been an issue for people and industries. Even the first settlers were advised to avoid certain areas because of the huge dangers that floods create for people, their homes and stock.

Nowadays, we are not more in control of the weather and nature than we were 200 years ago. However, we have developed systems that allow us to feel safer, prevent damage to our properties and recover faster from natural disasters.

One of the tools we have now to protect us from natural disasters is flood insurance.

What Is Flood Insurance?

Flood insurance is insurance against excess water that can originate from many different sources – pipes, storms, rivers and creeks.

Flood insurance covers the damages to your home and other property in case of any of these events.

Flood insurance is often built in common home, strata title, motor vehicle and business insurance policies.

In recent years, more and more storms, tsunamis and floods have caused problems for residential and commercial property owners.

What To Watch For In Your Flood Insurance Policy

The Australian Insurance Council has provided extensive information on flood risky areas and this has served as a benchmark for evaluating properties.

After evaluating the risk, the property owner can inquire for flood insurance. The first thing to do however, is review your existing insurance papers as flood insurance is often part of overall property insurances and you might already be covered!

On the other hand, there has been much discussion lately regarding the term “flood” that was just until recently only applied to river beds and creeks. Thus, one should confirm the meaning of the term as used in the insurance papers before making any claims.

Are you covered?

Depending on the risk that an area or property is under, the premium of the flood insurance will vary.

Some insurers only cover flood damage for under $15,000, some will offer it as an add-on option and some will have it as a compulsory part of the policy.

This all depends on the area of the property and the flood history of the region.

Flood insurance is an important part of your residential or commercial property especially if it falls in one of the flood-risk areas identified by the Australian Insurance Council.

If your property is part of a flood risk zone, make sure that you are covered. Also, double check the meaning of the term “flood” defined in your insurance policy to make sure that you are covered for various sources of the flood.

Insuring against natural disasters is tricky because every insurer defines what it covers. Read your policy twice and if you can, have your lawyer carefully review the terms.

Do you need flood insurance?

How much will it cost you?

What should you look for in your flood insurance policy?

Find more information and options about flood insurances here.