Flood Insurance

Flood insurance covers damage to your property and contents caused by the rising, overflowing, or inundation of water from natural watercourses, drainage systems, or dams.

In Australia, flood cover is now included as standard in most home and business property policies. But the definition of “flood” and how it applies can vary between insurers, so it’s worth checking.

Why It Matters

• Australia has experienced major flood events across Queensland, New South Wales, Victoria, and other states in recent years.
• Not all water damage is treated the same. Storm damage, rainwater runoff, and flood from a river are often handled differently under a policy.
• If your property is in a flood-prone area, your premium may be higher or your cover may have specific conditions.
• Understanding your flood cover before an event happens is far better than finding out after.

Flood vs Storm Damage

• Flood typically refers to water that escapes from a natural watercourse, lake, reservoir, canal, or dam and covers land that is not normally submerged.
• Storm damage usually covers damage from wind, rain, hail, or surface water runoff that hasn’t come from a river or creek overflowing.
• Some policies use a standard definition of flood set by the Insurance Council of Australia, while others use their own wording.

Simple Examples

• A river breaks its banks after heavy rain and water enters your warehouse. Flood cover responds.
• Heavy rain causes water to pool in your car park and seep into your office. This may be covered under storm or rainwater runoff, not flood, depending on your policy.
• A dam upstream releases water that inundates surrounding properties. Flood cover applies.

Common Mistakes or Misunderstandings

• Assuming all water damage is flood. Insurers distinguish between flood, storm, and rainwater runoff. The type of water event determines which part of your policy applies.
• Not checking if flood is included. While most policies now include it, some properties in high-risk areas may have flood cover excluded or subject to a higher excess.
• Underestimating your risk. Even if your property hasn’t flooded before, changing weather patterns and development upstream can increase risk over time.
• Ignoring the sum insured. Make sure your property and contents values are realistic so you’re not left short after a major flood event.

When to Speak to a Broker

If you own or lease commercial property or investment property in an area that has any flood history, want to understand what your current policy does and doesn’t cover for water damage, or need help comparing flood cover across insurers, a broker can review your situation.

Need help?

If you want to check your flood cover or make sure your property insurance is right for your location, reach out to Tank Insurance and we’ll review it with you.

Related Terms

• Excess - Flood claims may carry a separate, higher excess than other claim types.
• Underinsurance - Being underinsured is a major risk in flood-prone areas where rebuild costs can be significant.