Do you need flood insurance?

Whether you’re considering purchasing property, or simply reviewing your existing coverage, you may be asking yourself: do I really need flood insurance?

Flood insurance is coverage for damages caused by flooding, such as structural issues, or destruction of possessions. The term ‘flood’ in this instance does not just refer to rising storm waters but can also include flooding due to burst water pipes and related plumbing issues. 

If you have home and contents insurance, it’s likely that the policy may include flood insurance as standard. Due to the flexibility of the term, it may be worthwhile reviewing the specific definition and coverage your insurance provider outlines in your policy.

Let’s explore the benefits and disadvantages of this level of insurance coverage, and how to determine if it’s necessary for your home.

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 considering flood insurance.

However, if you live in an extremely flood-prone area, such as areas of Queensland and New South Wales where severe flooding events occur regularly, 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 likelihood of this event occurring and your making a claim.

In these instances financial stress can occur, and you may want to investigate government support and assistance for disaster-affected areas.

It’s worth noting that flood insurance coverage is not mandatory. After the 2011 Queensland floods, the federal government did make a push to have it become compulsory for insurance policies to cover, but this was not approved. While many insurers offer flood coverage as part of their home and contents packages, you may be able to opt out of it if you’re looking for ways to lower your insurance premiums. 

You’ll want to be sure that there is very low risk that flooding will occur in your home before you proceed with opting out of flood coverage, as no homeowner wants to be caught out.

What does flood insurance cover?

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

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. Flood coverage provides policy holders with the ability to claim any of the factors listed above, 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 for it on an ongoing basis. If a flood event occurs in your area, you may find that your premium rises in tangent, as your neighbourhood may be declared a higher-risk area by the insurers. And as the ongoing impacts of climate change continue, it’s likely that more severe weather events will occur throughout Australia, including flooding. This may mean your premiums increase regardless.

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, including affordable premiums. Consider utilising RateCity’s helpful comparison tables to compare your insurance options, and filter through policies based on whether they offer coverage for flash flooding and storm surge flooding.

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