It’s been more than two years since floods caused havoc to more than 20,000 homes and businesses in the Brisbane area and many affected are discovering much to their disappointment, that in the eyes of their insurance companies they weren’t insured due to confusing terminology and lingo in their policies.
The language and fine print in some policies has been deemed so complicated that the Insurance Council of Australia has indicated that, “many people could be confused by the small print of their policies – to the extent that they weren’t insured for flooding even though they thought they were.” The definition for water-related damage has vastly varied from one insurance operator to another but a recent Supreme Court ruling overturning an insurance companies decision not to pay out on a policy may bring some optimism to flood victims.
Judge David J. Jackson in the Supreme Court found that damage from water that backed up from swamped storm water drains was covered by a Milton business’s insurance policy, rejecting a bid by its insurer, Allianz Australia, not to pay out. The victim LMT Surgical sued Allianz Australia (who control 10 per cent of Queensland’s insurance market) for rejecting a payout on its industrial special risk policy, which covered water inundation but not flood. This judge’s decision may be an indication that last year’s Federal Government negotiations to set a standard set of words with the Insurance Council of Australia giving insurance companies two years to incorporate the new language in policies may have finally paid off.
The precedent set by the decision will give greatly needed hope to flood-affected victims still waiting for compensation from their insurers. It also indicates that claims can successfully be challenged and brings home the truism that confusing policy definitions should never exist and standard flood definitions must be used. Insurance law expert Peter Mann, a partner in Clayton Utz, has commented that, “the decision had some precedent value’ especially for nearby victims who had similarly worded policies.
Paul Watson insurance lawyer with Maurice Blackburn has said that, “the flood exclusion wording in the Allianz policy was fairly standard even in homeowner policies, meaning homeowners could have a shot at challenging any insurance knock-backs and shows that insurers get it wrong and it’s not hopeless for those who had their claims declined.”