Queensland is facing an increased weather risk from a trifecta of natural disasters this Summer, according to the Bureau of Meteorology (BOM). There is a heightened risk of cyclones, bushfires, and flooding. Attwood Marshall Lawyers Commercial Litigation Partner and NSW Law Society Accredited Specialist in Dispute Resolution, Charles Lethbridge, discusses what to do if you suffer loss as a result of a natural disaster, but your insurance provider rejects your claim. It’s important to understand what you are covered for as the Summer storm and bushfire season looms!
When preparing for a natural disaster, as a priority you should focus on how to prepare your home, your loved ones (including pets) and protect what’s most important to you.
When a disaster hits there are many situations that can unfold within your local community and in your own household. Storms, cyclones, flooding, and bushfires are all major weather events that can’t be avoided, which is why insurance companies include them in their policies, or in some cases exclude them due to the high risk of these types of events taking place in certain locations. You need to act now and put a plan in place to protect the assets that are most important to you (e.g. your home, your business, your vehicle). This includes looking carefully at your insurance policies and what cover you do and don’t have for certain events. As with most insurance policies, it is the fine print and the ‘exclusions’ which you need to become familiar with – now!
Home and contents insurance
Home and contents insurance covers your house and other structures on your property as well as your belongings for loss or damage due to events like fire, theft, and storms. It also covers your property for public liability claims (e.g. if someone is injured on your property).
An ‘insured event’ is an event we cover should it cause loss or damage to your home and/or contents, such as:
- Storm and rainwater (flood cover is often optional or an “extra”)
- Theft (or attempted theft)
- Escape of liquid (e.g. burst pipe)
- Impact at home (e.g. fallen tree)
- Breakage of glass, ceramic and sanitary fixtures
- Malicious damage, vandalism, riot, or civil commotion
- Earthquake or tsunami.
For an additional premium, you can customise your home and/or contents insurance by adding one or more optional covers to your policy. During storm season flood damage, fire damage and storm damage are some of the main causes for insurance claims. It can be confusing as to what exactly your insurance policy covers. PDS statements that insurers provide you when you take out insurance can be extremely lengthy and written in a way that is difficult to interpret. At the end of the day, it all comes down to the fine print and what your product includes and excludes if you make a claim. It is important that you seek expert legal advice to understand your rights and what to do if you your claim is denied.
Storm damage – what to do if an insurer denies your claim
Most insurance policies will cover you for damage because of “storm,” “rainwater” and “run-off.” The exact definition of each of these words will depend on the wording of your policy, but generally they mean:
- Storm: a storm, cyclone or severe atmospheric disturbance which can be accompanied by strong winds, rain, lightening, hail, snow, or dust
- Rainwater: water falling from the skies that runs off over the surface of the land (and many include overflowing water from stormwater drains)
- Run off: rainwater that has collected or flowed across from normally dry ground or overflowed from pools or spas.
If it happens that your property was damaged by floodwater, you should check your policy to see if you are covered.
If the insurance company establishes that your home was damaged by both rainwater and floodwater, they may reject the claim. If this happens, you should attain legal advice immediately, as there may be arguments the insurance company has failed to consider.
If you live in a coastal area, you may not be covered for damage caused by storm surge (a rush of water onshore caused by strong winds pushing on the ocean’s surface) and/or movements caused by the sea (not including tsunamis).
You should check your insurance policy if your home is damaged by storm surge, as some claims may be approved if it can be shown that the damage caused by the storm surge occurred simultaneously with damage caused by a storm.
If there is an issue about the source or the extent of damage, the insurance company may hire experts (such as an engineer) to prepare a report. You are entitled to documents which the insurance company rely on to assess your claim. The results of the reports are not conclusive and can be challenged by your own evidence.
If your home or business suffers damage as a result of storm, rainwater or run off rainwater, it is important to collect comprehensive evidence about the damage, such as:
- Eyewitness accounts about the time any water entered the house, the level it rose, where it came from, how it first entered the house, the colour of the water and whether the water increased in stages or at a steady and uniform rate.
- Reports from independent builders and/or assessors outlining the extent of the damage and if necessary, the cost to repair the damage.
- Photos, videos and other records of the property, before and after the storm.
- You may be required to obtain expert reports to address specific issues. A lawyer can help you obtain these types of reports to support your claim.
If your claim is denied, you should ask for a copy of the written document stating why your claim was rejected and if you believe the rejection was unwarranted, obtain advice from an experienced insurance dispute lawyer who can help review your claim and advise you of the next steps you should take.
Flood damage – what to do if an insurer denies your claim
Your policy’s Certificate of Insurance and Product Disclosure Statement (PDS) should clearly state whether you are covered for flood damage and what limits may apply.
Some insurers offer flood cover as a standard inclusion for home and contents policies. However, some insurers exclude flood cover altogether and other insurers treat flood cover as an optional extra if you pay an additional premium for coverage.
Even if your policy excludes flood damage, you may still have cover for storm or rainwater damage.
Since 2014, most home and contents insurance policies use a standard definition to define “flood” as:
The covering of normally dry land by water that has escaped or been released from the normal confines of any of the following:
- A lake
- A river
- A creek
- Another natural watercourse
- A reservoir
- A canal
- A dam
But even if your policy covers flood damage, policies may exclude coverage for:
- Actions of the sea, storm surge or tsunami
- Soil movement, such as erosion, landslide, shrinkage, or subsidence (some policies will cover it if it happens within 72 hours of the flood)
If you choose not to get flood cover, your policy may also exclude cover for:
- Rainwater run-off
- Rainwater run-off combined with flood waters (even if this is not stated in the policy itself)
- Storm surge.
But if you arranged your policy through an insurance broker, and the broker gave you financial advice, your policy might not use the standard definition.
To check how your policy defines “flood”, ask your insurer or insurance broker, and read your policy’s Product Disclosure Statement.
If your insurer didn’t clearly tell you that your policy excluded flood damage, in some cases, you might be able to contest whether your insurer clearly informed you that you are not covered for flood damage. Consider if any of the following apply to you:
- Did your insurer tell you that you were covered for flood? Many insurers keep voice recordings of your conversations which you can request.
- Did your insurer send you the policy documents within the 14-day cooling off period? Many insurers keep records about when these policy documents were sent, and you can request this information.
- Is there any confusion or ambiguity in the wording of the policy?
If any of the above apply to you, you should get legal advice as you may be able to argue that you should still be covered.
Fire Damage – what to do if an insurer denies your claim
Not all policies will cover all damage caused by fires. There have been many cases where insurers have covered damage caused by fire itself but tried to avoid paying for damage caused by scorch (the heat of the fire).
Also, there have been circumstances where insurers have paid for damage caused by fire but attempted to evade paying for water damaged caused by the insured person trying to put out the fire.
All policies require that the insured person maintains their home in a reasonable state and insurers will not pay out on claims which are caused by an insured person’s failure to maintain a property.
Following fire damage, disputes can often break out about the degree of the damage caused by the fire. For example, if an insurer decides that a property was in poor condition or damaged prior to the fire, they may decline some, or all of the claim.
It is also important to note that some insurance policies do not cover damage caused by deliberate acts. This can be the intentional acts of the property owner, another resident or any third party.
If your insurer decides that the cause of your fire is not covered under your insurance policy or that the value to replace your home and contents is less than the actual value, you have appeal options and you should get in touch with an experienced commercial litigation lawyer to pursue your rights.
Attwood Marshall Lawyers – helping you prepare for the storm season and protect your assets
The Summer storm and bushfire season is fast approaching, and it will be one of the worst we have experienced in Queensland, according to the BOM. If you haven’t done so already, this serves as a timely reminder to review all your insurance policies to make sure you are protected if the unexpected does happen. If you are unsure about what type of insurance you need to suit your needs, we always recommend that you discuss different insurance products with a reputable insurance broker who can help you understand the Product Disclosure Statement and most importantly, what is included in your cover and what is excluded.
If you are involved in a dispute with your insurance provider over your policy, or if you believe your insurer has unfairly denied liability for your claim, contact our friendly team to obtain preliminary legal advice in relation to your rights and find out what options are available to you.
If you would like more information or want to obtain the best possible chance of a successful outcome in resolving your dispute with your insurer, please contact our Commercial Litigation Department Manager, Amanda Heather on direct line 07 5506 8245, email firstname.lastname@example.org or free call 1800 621 071.
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