While navigating the options for flood insurance for property has no doubt been on the mind of many Australians, what exactly do these types of policies cover?
Although Queenslanders are no strangers to going about their business through extreme weather events, it’s safe to say that the current natural disaster affecting many parts of the state wasn’t exactly something that anyone had predicted this early into 2022, let alone desired.
Eleven years on from the devastating flooding of 2011, this time an estimated 15, 000 homes have received water damage in Brisbane alone, with thousands more facing catastrophic emergency levels across South East Queensland and Northern New South Wales.
Although flood insurance companies are still wading their way through the thousands of claims from Queensland homeowners, do these types of policies offer the level of protection many of us actually require?
What Flood Insurance Does And Doesn’t Cover
Home and contents insurance provides cover for unexpected damage to your property or your belongings within it. Although they can be sold as two separate policies, more often than not they are combined to protect both structures and the items stored inside of them. Like all insurance policies, it’s crucial to read the fine print as each provider offers slightly different terms and variations, particularly when it comes to flooding.
Unbeknownst to many, the term “flood” has a standard definition across the insurance board, so your cover will be the same no matter which insurer you’re with. However, each insurer calculates your risk differently, so be sure to shop around for a better premium. As an example, if you live in an apartment in the city and a long way above ground, the flood cover component makes up a miniscule portion of your premium. In comparison, if your house is a block or two away from a river, then expect to pay hundreds of dollars a year extra for flood insurance cover.
Once upon a time, insurers used to calculate risk on a postcode basis, but are now shifting to a more customised approach where properties are evaluated based on their individual addresses. Each flood insurance provider generally uses different methods and data sources, which means that their assessment of your risk – and in turn the price of your premium – will generally vary from others.
It’s also important to note that while most home insurance policies generally cover several other water-related events like storms, cyclones, rainwater runoff and “escape of liquid” such as events like burst pipes, insurers can define these events how they like.
Thankfully, almost all home insurance policies generally include cover for temporary accommodation after an insured event. If your property or the fundamental contents of your home are too damaged for you to stay at the dwelling, this could mean a hotel for a couple of nights, longer term rental accommodation, or even portable accommodation that has the potential to fit in your backyard while repairs are completed.
However, this type of cover is usually capped at 10-20% of the amount your home is insured for, or 12-24 months’ rent at a similar property. For renters with contents insurance, unfortunately only the cost of any additional rent over and above what you normally pay will usually be covered.
The sad thing is that the number of “once in a hundred year” weather events are increasing in Australia, and it’s not surprising that some homeowners have opted to make the move elsewhere out of the danger zones. If you’re one of those growing numbers of people, it can be difficult to know who to turn to when it comes to refinancing or obtaining the right type of home loan product for the next stage of your life. Thankfully, we know just the professionals who can help.
Partnering With The Mortgage Professionals
Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but the good news is that it doesn’t have to be.
Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.