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Do you need flood insurance?

Alex Ritchie avatar
Alex Ritchie
- 3 min read
Do you need flood insurance?

Key highlights

  • Flood insurance is not mandatory, but it may be worth considering if you live in a flood-prone area or are concerned about the risk of flood damage.
  • Flood insurance may cover damage to the structure of your property and your possessions caused by flooding, and may include repairs, replacements, and temporary accommodation.
  • Having flood insurance provides peace of mind and financial protection in the event of a flood, but it comes with regular premiums that may increase in high-risk areas or due to climate change.
  • If you have home and contents insurance, your policy may include flood insurance as standard. But flood insurance coverage is not mandatory. After the 2011 Queensland floods, the federal government pushed for flood insurance to become compulsory for insurance policies to cover, but this was not approved.

    You may be able to opt out of flood insurance if you’re looking for ways to lower your insurance premiums. However, you’ll want to be confident that your home is at very low risk of flooding before you opt out of flood coverage, as no homeowner wants to be caught out.

    When do you need flood insurance?

    If you live in a flood-prone area, or if you’re worried about the risk of flood damage to your property, it may be worth checking what flood insurance is available to you.

    However, if you live in an extremely flood-prone area, such as areas of Queensland and New South Wales where severe flooding events are known to occur, you may find that insurers are unlikely to cover your property. Or, if they do, the premiums may be eye-wateringly high, due to the higher likelihood that you’ll need to make a claim. If this would lead to financial stress, you may want to investigate government support and assistance for disaster-affected areas.

    What does flood insurance cover?

    Flood insurance may offer a helping hand for homeowners who have experienced damage to the structure of their property due to flooding, including flooring, foundations, and walls. It may also cover damage to your possessions caused by flooding, including electronics, appliances, and furniture.

    Your flood insurance may allow you to claim:

    • Repairs to the home and contents
    • Replacement of contents
    • Rebuilding costs for the property
    • Temporary accommodation

    In some cases, the term ‘flood’ may not just refer to rising storm waters, but also include flooding due to burst water pipes and related plumbing issues. It may be worth reviewing an insurer’s specific definition of “flood” and the flood cover they provide before taking out a policy.

    What are the benefits of flood insurance?

    Having flood coverage on your home and contents policy can offer peace of mind that your property and belongings are secured. You may be protected from financial loss in the event of a worst-case scenario, without needing to withdraw savings, rely on government assistance, or take on debt to cover any losses.

    However, like any type of insurance, this coverage is not free, and you will need to pay regular insurance premiums. If a flood event occurs in your area, you may find that your insurance premium also rises, as insurers may deem your neighbourhood a higher-risk area. Considering the ongoing effects of climate change, more severe weather events may occur throughout Australia in the future, including flooding. This may see your premiums increase regardless of where you’re living.

    This is why it’s more important than ever to ensure you’re comparing your options and choosing the most competitive coverage for your home and contents, while keeping affordable premiums. Consider using RateCity’s helpful comparison tables to compare your insurance options, and filter policies based on whether they offer coverage for flash flooding, storm surge flooding, and more.

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    Product database updated 30 May, 2024

    This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.