Australian Property News

Standard flood definition soon to kick in

Posted on Tuesday, November 15 2011 at 9:57 AM

To the relief of many property owners, the Gillard Government yesterday officially announced that a standard ‘flood’ definition would soon apply across all home and contents insurance policies.

Following the release of the 47 key recommendations outlined in the final Natural Disaster Insurance Review report, the government will release draft regulations on the standard definition by the end of this year.

The standard ‘flood’ definition will be: The covering of normally dry land by water that has escaped or been released from the normal confines of any lake, river, creek or other natural watercourse, whether or not altered or modified, or from any reservoir, canal or dam.

The government is also considering whether to make flood cover mandatory as part of home and building insurance policies, while giving consumers the option to opt out of that cover.

Insurers will also be required to provide consumers with a Key Facts Sheet clearly highlighting on a single page all key information about the policy features.

Lenders will also be required to remind borrowers of their obligations to maintain insurance and of the risks if under insuring.

Another government commitment announced is for a flood risk information portal to be established providing a single access point to existing flood mapping data.

This portal will help with emergency management, land use planning, environmental management, and detailing the setting of insurance premiums, said Attorney General Robert McClelland.

Other recommendations currently under government consideration include a provision of affordable flood insurance for those at high risk and the creation of a reinsurance pool of funds to enable insurers to provide discounted flood coverage.