The 2022 floods that wreaked havoc on South-East Queensland and Northern New South Wales continues to affect thousands of homeowners who are now waiting on their insurers to pay out their claims or make vital repairs, writes Georgia Taylor, Attwood Marshall Lawyers Insurance Litigation Senior Associate.
Nearly 240,000 insurance claims have been lodged by homeowners who were impacted by the February and March 2022 floods in South-East Queensland and Northern New South Wales, with an estimated incurred consumer loss of $5.76 billion.
The event is now considered the costliest natural disaster in Australia’s history, with insured damages surpassing 1974’s Cyclone Tracey (which cost $5.04 billion), 1989’s Newcastle earthquake ($4.24 billion), and the previous record-breaking hailstorms that hit Eastern Sydney in 1999 ($5.47 billion).
According to the Insurance Council of Australia, claim numbers for the South-East Queensland and Northern New South Wales floods were much higher from the outset than at the immediate stage of other recent flood events, and so a record number of total claims was expected.
In Brisbane it was recorded that 23,400 properties were affected by the floods, which occurred after three consecutive days of over 200mm rainfall, causing flash flooding of creeks and overland flow flooding in the city.
Lismore in NSW saw record-breaking water heights with entire buildings completely submerged. The Northern Rivers flood catastrophe, which led to 13 deaths and tens of thousands of properties damaged or left inhabitable, has reportedly cost taxpayers $4.6 billion in infrastructure improvement and rebuilding as well as grants for individuals and business. State taxpayers have covered $2.8 billion of the bill, with Commonwealth tax money footing the remainder.
A year on, and stories are aplenty of residents still experiencing significant delays to repair works and continuing to live in temporary accommodation. Some residents are so fed up with the waiting times for suppliers and protracted dealings with their insurers and building contractors that they have walked away from their damaged homes entirely, selling them as is and losing hundreds of thousands of dollars.
On top of that, insurance bills are increasing dramatically or have been wiped entirely with insurance companies no longer insuring for some events. Even for residents who were not impacted by the floods but live on the same street or near flooding zones. The Gold Coast Bulletin recently reported that residents are paying $8,000 to $15,000 on average per year instead of $4,000 to $6,000 on their insurance bills. In some instances, premiums have increased from roughly $2,000 a year to $25,000, the newspaper reported.
The Australian Financial Complaints Authority (AFCA) is the growing complaints hub for the financial services industry, which includes insurers. Many frustrated consumers have turned to filing complaints in the hope it prompts some action from their insurers. However, due to the onset of thousands of complaints, we have experienced wait times of up to 12 weeks, just for an appointment of a case manager which only causes further delay. As a result, there are many people turning to lawyers for advice and to try to fast-track their claim or fight for their full entitlements.
Understanding your policy
The risk of natural disasters in Australia continues to become more severe, frequent, and costly, as the country battles bushfires, cyclones, drought, floods, and storms. In 2022, besides the floods that affected South-East Queensland and New South Wales in February and March, severe weather also impacted Sydney in July, and storms and floods affected Tasmania, Victoria, and New South Wales in October.
For this reason, having appropriate building and contents insurance when you are a homeowner, as well as business interruption insurance if you are a business owner, is not simply a “nice-to-have” but essential in protecting your property and your assets.
With the rising cost of living, drastic increase in insurance costs, and some insurers imposing embargoes on parts of the country, denying new policies to flood-affected areas, it is becoming increasingly difficult to ensure you are protected.
Too often, people don’t take out appropriate cover to protect themselves in the event of a natural disaster, or they fail to read the fine print on the policy they purchase to understand their coverage, assuming they are protected if the unexpected happens. Unfortunately, it’s only when they need to make a claim that they realize their policy contains exclusions and doesn’t protect them in the way they thought it did.
For example, many people may have home and contents cover that states they are covered for storm damage. But it is important to know that “storm damage” doesn’t include flood damage, even if that flood has derived from a storm event. Insurers use all sorts of terms and definitions in their product disclosure statements, and it can be difficult to interpret what is covered and what is not.
Whenever taking out insurance, it is always best to discuss your specific needs with a reputable insurance broker who can identify the most suitable policy for you, explain all the inclusions and exclusions that will apply, whilst obtaining the best price possible.
Tips for making an insurance claim
If disaster strikes and you need to make a claim on your insurance policy, the first step is to contact the insurer to report your claim and report the damage immediately. When doing this, make sure you are familiar with your policy and product disclosure statement, as well as your entitlements. Collect as much documentary evidence as you can to support your case. This can include photos or video footage of any damage to your property or belongings.
Keep written or typed notes of all your contact with the insurer, and don’t be afraid to challenge them on what you’re covered for or if they have offered you an amount that is less than what you expected to fix the damage or replace your property.
Unhappy with an insurer’s decision? The next steps to take
According to the Insurance Council of Australia, only 81% of the 240,000 claims to be filed related to 2022’s South-East QLD and Northern NSW floods have been closed. That means that there are still an estimated 45,000.00 claims which remain to be dealt with.
If a dispute arises between yourself and your insurer about your claim – or you believe the insurer has unfairly denied liability for the claim – you can have the decision reviewed by the insurer’s internal dispute resolution department.
Alternatively, a complaint can be lodged with AFCA. AFCA is tasked with reaching an agreement with the insurer for you and can award compensation for the losses you have suffered because of an insurer’s actions.
Between 1 July 2022 and 31 December 2022, AFCA received 33 per cent more complaints compared to the same period the year before. The independent regulator, which has recently had to boost the size of its complaints team, helped claw back $5.9 million in compensation and refunds for policyholders affected by the Victorian and New South Wales floods in 2022.
AFCA has also put pressure on insurers, urging them to do all they can to promptly review claims, regularly update customers on expected time frames and clearly communicate the options available to their customers.
Attwood Marshall Lawyers – helping you protect your rights
Attwood Marshall Lawyers Commercial Litigation team have extensive experience handling insurance disputes. Our team understand the types of tactics insurers use to deny valid claims or pay out less than what a customer is entitled to.
If you are frustrated with the way your insurer is handling your matter or disagree with a decision they have made about your claim, we can help you resolve your dispute and help you negotiate a fair settlement. Contact our dispute resolution team at the earliest opportunity for preliminary advice on your rights. We will be able to advise you on your reasonable prospects of succeeding in your claim and the next steps to take.