4 questions to ask about home insurance and flooding

Man walking through flood waters with an esky, wondering if he has flood insurance cover in his home insurance policy.

Australia has just come out of the wettest summer in four years, with the third heaviest December rainfall since the Bureau of Meteorology began national records in 1900.

The 29% above average nation-wide drenching is linked to La Niña, part of a global weather pattern where winds and ocean currents bring cooler temperatures, increased rainfall and tropical cyclone activity that counters the drought-inducing conditions of El Niño.

More rain generally means if you live near a creek, river, major storm water drain or in a low-lying area, your property could be in a flood-prone area. It’s therefore important to investigate your flood risk, make sure you have home and contents insurance that’ll cover your circumstances, and have an emergency plan in place.

Now might be the time to reassess your home insurance for the year of wet weather ahead, and consider flood insurance coverage if your property is within or close to a flood zone. But keep in mind, flood cover is often listed as an optional extra on home insurance policies and comes with an additional fee.

So, if you’re wondering whether or not you should opt-in for flood insurance, here are some of the key questions you’ll want to ask first.

Do I live in a flood prone area?

Your relevant State Emergency Service (SES) is a reliable source of information about flood risks and evacuation plans. For example, NSW SES has a handy tool for checking flood warnings via suburb or postcode.

But they recommend you contact your local council or head to the relevant website (like this site for Newcastle flood zoning) for specific information about potential flood risk and your property.

Some state governments also provide broader flood zone maps like this Queensland data tool, or this national flood information portal.

What is the difference between flood cover and storm cover?

While it may seem like a hazy distinction, insurance companies have strict definitions around various forms of insurable water damage.

You’ll often see building and contents insurance policies offering coverage for storms, cyclones, rainwater runoff and ‘escape of liquid’ (that’s usually a term for burst pipes). Sometimes tsunamis are also included, but you’ll often see ‘storm surges’ or ‘actions of the sea’ (which includes rising ocean levels or tidal waves) on the exclusions list.

Flooding is separate to all of this. After the disastrous 2011 floods, a standard definition was introduced which all insurance companies must now adhere to when providing flood insurance. It defines flooding as:
The covering of normally dry land by water that has escaped or been released from the normal confines of:
- any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or
- any reservoir, canal, or dam

Limits and details will differ between providers, but generally flood insurance covers things like the cost of repairs or replacement if your home or contents is damaged in a flood, as well as temporary accommodation if your flood-affected home is uninhabitable.

How much does flood cover cost?

While some home insurance policies may cover you automatically for storm damage, others won’t or may only offer it as an optional extra. If you choose to opt-in for flood cover, you can expect to see an increase to your premium.

But whether it’s a standard policy feature or an optional extra, the level of risk posed by flooding where you live impacts insurance costs. Every insurance provider calculates premiums differently, assigning different weighting to various risks, and using different data to assess a property’s flood risk.

Historically this has been done via postcode, but address-level analysis can now be part of this equation. As such, your home insurance quote may be different from your neighbours and can change from provider to provider.

In general, flood damage can be substantial even if flooding only rises a few centimetres above the floor, resulting in structural damage or full carpet and flooring replacement. Therefore, if your property has a high flood risk, you can expect coverage to be pretty pricey.

Can I reduce the cost of flood insurance?

The way insurance pricing works is to increase costs in line with how likely a policyholder is to make a claim. If an insurance provider can include limitations on coverage, then costs can be reduced in some circumstances

However, because insurance companies can’t place any caveats on the legal definition of a flood, they can’t reduce their liability and so costs remain high across the board. This means there isn’t a lot you can do to cut the cost of your flood insurance if you live in a flood-prone area.

But there are some actions you can take to make sure your insurance claim is accepted after a flood. This includes:

  • Making sure your home is in good condition. If your property is in a state of disrepair, with clogged cutters, rotted wood or a broken window, your insurance provider may try to reject your claim. If you can prove you did everything to ensure your home was protected against the elements (like getting repairs done swiftly) then you’re more likely to make a successful insurance claim.
  • Not leaving your home unoccupied for long stretches. Most home insurance policies include a condition that if your home is unoccupied for a longer period (often more than 60 days) then insurance cover is void. If you are planning an extended trip away, you can avoid this by getting a house sitter, or by opting for unoccupied coverage that’s available with some providers for an additional cost.
  • Getting insured before flood waters threaten your area. If you think your property might be at risk, don’t wait for a bad weather cycle to get covered. You’ll generally find there are waiting periods between 48-72 hours before your flood insurance kicks in when your property isn’t protected.

It’s important to remember conditions, limits, inclusions and exclusions differ between insurance providers. Your best bet is to read through your insurance policy product disclosure statement (PDS) carefully so you know all the details before making a decision about flood coverage.

Compare home and contents insurance - rates updated daily

Search promoted home insurance below. Advertiser disclosure. Important information on terms, conditions and sub-limits.
  • Home & Contents Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
      Optional Extra
    Monthly payments
    cost extra
    Calendar icon
    Yes
    Underinsurance protection
    Underinsurance protection icon
    Optional ExtraUp To 25% Of Building Sum Insured
    New for old
    replacement
    Replacement icon
    Yes
    Go to site
    Details
  • Everyday Comprehensive Home and Contents Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
    Monthly payments
    cost extra
    Calendar icon
    Yes
    Underinsurance protection
    Underinsurance protection icon
    No
    New for old
    replacement
    Replacement icon
    Yes
    Go to site
    Details
  • Home & Contents Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
    Monthly payments
    cost extra
    Calendar icon
    Yes
    Underinsurance protection
    Underinsurance protection icon
    No
    New for old
    replacement
    Replacement icon
    Yes
    Go to site
    Details
  • Home & Contents Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
      Optional Extra
    Monthly payments
    cost extra
    Calendar icon
    Yes
    Underinsurance protection
    Underinsurance protection icon
    Optional ExtraUp To 25% Of Sum Insured
    New for old
    replacement
    Replacement icon
    Yes
    Go to site
    Details

*Terms, conditions, exclusions, limits and sub-limits may apply to any of the insurance products shown on the Mozo website. These terms, conditions, exclusions, limits and sub-limits could affect the level of benefits and cover available under any of the insurance products shown on the Mozo website. Please refer to the relevant Product Disclosure Statement and the Target Market Determination on the provider's website for further information before making any decisions about an insurance product.

^See information about the Mozo Experts Choice Home Insurance Awards