Disaster Legal Help Victoria

Insurance – storms and floods

Making a claim

This information is intended as an introduction only and should not be relied on in place of legal advice. Each individual’s entitlements will depend on their circumstances and the particular terms of their insurance policy. For more information, see our page on Insurance.

The law says that your insurance company must tell you whether or not it will cover your home against flood damage, and that it must do so before the policy is taken out, or before it is renewed. If this was not done, then the insurance company must pay for flood damage. This is called 'standard cover'. For example, standard cover applies if you paid the premium at the office and the policy was mailed afterwards. However, if you get the policy in the mail, and a year later you renew the policy, standard cover will not apply once you renew. This is because you received documents telling you that the insurance company did not cover you for flood before you renewed the policy.

Your insurance policy is your contract with the insurer. It states when, how, and what the insurance company must pay for. Some flood insurance cases are difficult. Victoria Legal AidExternal Link can give you advice about whether you need a lawyer to understand this.

If your home is destroyed or damaged by a flood or storm, collect evidence of the damage. The more detail you get, the easier it is to show what caused the loss. You should try to gather evidence such as:

  • eyewitness accounts about the time (or times) the water came into your house, the level it rose to, where it came from (the source), how it first came into your house (for example, through toilets and showers or over land), and whether the water level increased in stages or at a steady rate
  • eyewitness accounts of what happened to neighbouring properties
  • maps showing rainwater drains in the area (you can get maps like this from your council)
  • information about when any river levels peaked
  • photos, videos and other records of the flood, including home videos and, if possible, news footage. It may also help if your photos or videos show any damage to neighbouring property.

Your policy is also likely to require you to tell your insurer as soon as possible about the damage. If you do not do this within a reasonable time, your claim may be refused. It is better not to delay.

Floodwater and rainwater

Insurance companies usually distinguish between floodwater and rainwater in their policies. You will need to check your policy to make sure that you have the right type and level of cover.

Your policy will explain the difference between what is considered floodwater and what is considered rainwater (which reflects the 'standard definition' of flood imposed by the Insurance Contracts Act 1984 (Cth)). Generally speaking:

  • Rainwater is water that falls from the sky and runs off over the surface of the land (and may include water overflowing from storm water drains).
  • Floodwater is water that escapes or is released from rivers, lakes, channels, dams, or canals that covers usually dry land.

Most insurance policies make clear if the insurance company will pay for damage caused by floodwater. You may have been given an option by your insurer as to whether to pay for, or opt out of, flood cover. If you don’t have flood cover you will probably only be covered for damage from rainwater or stormwater.

For example, if you do not have floodwater cover and your policy says floodwater means 'water escaping from a river or stream', but the damage is shown to have been caused by water running down a mountainside, then the insurer must pay because floodwater did not cause the damage.

If your house is damaged, you don’t need to decide whether it was caused by rainwater or floodwater. Insurance companies get reports from experts, such as hydrologists, to determine the cause of the damage. The expert’s report builds a picture of the events that led to the damage. It will assess the direction the water flowed, whether the water came from a river or from stormwater run-off, and what level the rainwater would have reached on its own. The report might not be conclusive, as its findings may be based on false assumptions or be different to reliable eyewitness reports or video evidence.

Disputing an insurance decision

If the insurance company rejects your claim, there may be circumstances they have not considered. For example:

  • The rainwater came in first. The water level in your house may have risen and then stopped. A second wave of water then came into your house. This may show that the first wave was rainwater and the second surge was floodwater. The insurance company has to pay for damage caused by the rainwater.
  • There was floodwater, but only a little. If the amount of floodwater was small compared to the amount of rainwater, the insurance company may still have to pay.

If your claim is rejected by your insurance company, you may be eligible to have it reviewed for free by the Australian Financial Complaints Authority (AFCA)External Link . Your insurance company must follow the AFCA decision. Your insurer must tell you if your claim is eligible for review by AFCA and you can check this with AFCA directly. The scheme has two steps:

  1. You need to apply to the insurance company for an internal review through the insurer’s internal dispute resolution/complaints process. Insurance companies will make a decision about your complaint within 30 calendar days if they get all necessary information and have completed any investigation needed. Insurance companies will tell you about the progress of the complaint at least once every 10 business days.
  2. If the claim is still rejected after the internal review, you can apply to AFCA within two years of the internal review decision. AFCA will investigate the complaint and gather relevant information to determine the dispute. AFCA can then recommend how the matter should be resolved. If necessary, AFCA can make a decision that is binding on the insurer for claims of up to $1,085,000. However, AFCA can only award a maximum of $542,500 in compensation for financial loss. The insurer can agree to AFCA deciding the dispute even if the claim is over $1,085,000 if AFCA is also willing to decide it.

If you are unsuccessful at AFCA, you can still take your matter to court. You must commence court proceedings within six years from when the claim arose, which may be six years from the date of the 'insured event' (the storm or flood that resulted in the claim).

Where to get help

For legal information and referrals, call Disaster Legal Help Victoria on 1800 113 432 (Monday to Friday, 8 am to 6 pm). You can also contact your closest community legal centreExternal Link to get advice from a local lawyer.

For more support options, see Other organisations that can helpExternal Link or find Other ways to contact usExternal Link .

Australian Financial Complaints Authority

The Australian Financial Complaints AuthorityExternal Link offers dispute resolution for the financial services industry, covering consumer complaints about credit, finance and loans, insurance, banking deposits and payments, investments and financial advice, and superannuation.

Call 1800 931 678, Monday to Friday, 9 am to 5 pm.

Consumer Action Law Centre

The Consumer Action Law Centre (CALC)External Link offers legal advice and financial counselling for vulnerable people in Australia.

Call 1800 466 477 between 10 am and 1 pm on Tuesdays, Wednesdays and Thursdays.

You can also get online legal help by using the 'Chat with us' button on the CALC websiteExternal Link .

Insurance Law Service

The Insurance Law ServiceExternal Link provides legal advice about insurance problems for people under financial stress.

Call 1300 663 464, Monday to Friday, 10 am to 1 pm.

Reviewed 16 November 2023