Property Damage - Flood Versus Storm Considerations

In early February 2005 Australia’s eastern seaboard was subjected to intense rainfall and storm force winds. The Bureau of Meteorology reported that almost 120mm of rain fell in the 24 hours to 6.30am in Melbourne, Victoria. This is the highest level since records began 156 years ago. Property and roads were flooded, fallen trees damaged buildings and there was significant interruption to public transport. There were real concerns for the inner city retail precinct at Southbank when the Yarra River rose to dangerously high levels.

Insurance claims followed with a recurring issue – Is the damage caused by storm or flood? The response is important as storm damage is generally covered but flood damage may be excluded.

For example, if not endorsed, the standard Mark IV Industrial Special Risks policy contains the following exclusion: -

"The Insurer shall not be liable under Section 1 and/or 2 in respect of physical loss, destruction or damage occasioned by or happening through: -

flood, which shall mean the inundation of normally dry land by water overflowing from the normal confines of any natural watercourse or lake (whether or not altered or modified), reservoir, canal or dam; water from or action by sea, tidal wave or high water."

As with all claims it is insufficient to simply describe the damage, the cause of the damage must be identified.

If water damage was caused by the rainfall accompanying the storms a claim may succeed but this may not be so if it was caused by an overflowing river. Don’t put the sandbags away just yet!

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Author

Published with permission of Claim Solutions Pty Ltd.

Insurance Policy

Country: - Australia

Policy Description: - Mark IV Industrial Special Risks (ISR) policy

Insurer: - Various

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