Natural disasters: Getting Insurance Companies to Pay Up

Following on from the Queensland and Victorian “floods” many who thought they were insured have turned to their longstanding insurance policies, serviced and maintained with substantial yearly payments, only to find that by reason of a definition or the meaning given to words such as, ”flood “ they are not protected or covered and that money invested in insurance has not purchased the protection they thought they were getting.

Reasons for this we are told are the difficulty in getting a standard definition for terms such as “flood”, a definition that means the same thing in terms of all insurance policies, a definition that ordinary people feel they can follow and rely on. This it seems is about to happen either by self regulation or by government legislation - unfortunately too late for the victims of the recent floods.  The proposed definition would define flood 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".  Read ABC News article.

A further idea that has been proposed by the Government is that every insurance policy includes a single page of key facts. The Assistant Treasurer Mr Shorten has said:  “this would allow consumers to see the key elements of the policy - what is covered and what is not - at a glance.” Read ABC News article.

Do you have views on the proposed definition of flood? Certainly making insurance policies easier to read and understand would be an advance – are there any other ways to improve in this area?

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