Floods Put Insurance Contracts in Focus

Article excerpt

By Professor Michael Robertson, Head of the School of Law, USQ

THE recent tumultuous events in our region and state have brought aspects of insurance law sharply into focus.

At stake are questions about the meaning of words like C[pounds sterling]floodC[yen] and C[pounds sterling]stormC[yen]. Unfortunately, and contrary to what many would regard as commonsense, they mean different things in different insurance contracts. As the Insurance Council puts it, C[pounds sterling]many insurers use unique definitions of what flood meansC[yen]. In other words, they create their own meanings!

Generally, flash flooding means one thing (basically, localised flooding caused by intense rain), which is different from riverine flooding (basically, where rivers and creeks break their banks, including as a result of heavy rain in catchments). Many policy holders are finding out far too late and to their surprise that they are often not covered for the extensive damage they have suffered. Understandably, the perception is that some insurance companies reject claims by relying on subtle but crucial interpretations of words and phrases that seem pretty clear.

We now know that the Federal Government and the Insurance Council are committed to working out a standard definition of C[pounds sterling]floodC[yen], so that some of the current confusion can be avoided in the future. …

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