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Establishing a standard definition for flood insurance

  • by The Quotesonline Team

According to Federal Assistant Treasurer Bill Shorten, Australia’s insurance industry have agreed to establish a standard definition for flood insurance. This comes after the devastating discovery, by almost half of homeowners affected by recent flooding in eastern Australia, that they didn’t have insurance to cover the disaster.
After a meeting with the Insurance Council of Australia, Shorten said the industry had agreed to apply a standard definition to flood insurance and write policies in simpler language.
“I think everyone who owns a home and contents and insurance policy knows that a lot of the fine print is very hard to decipher,” Shorten said. “When tragedy strikes, as it has with the floods, many people are left scrambling to wonder if they are adequately insured for the flood or event that has just occurred. It is not acceptable in the future not to have standard definitions … so people know what they’ve bought and what they haven’t bought.”
In the aftermath of the floods, many homeowners discovered their insurance policy covered them in the event of a flash flood or flooding resulting from a storm, but not flooding from a river.
Mr Shorten said he would meet the council twice over the next month, and consumer groups would be consulted on how best to apply a standard definition.
“The move would “not be without its complexities”, he said. “Giving a standard definition is not going to be the panacea, the silver bullet for sorting out all costs arising out of floods. But the insurance industry accepts that having better contracts and clarity on what’s covered and what isn’t is an important building block to ensuring Australian communities are resilient and safe.”
Insurance companies were handling about 40,000 claims worth $1.5 billion in Queensland and nearly 4500 claims in Victoria, he said. Anyone who believed their claim was not being fairly dealt with should appeal to the Financial Ombudsman Service.
“Many millions of dollars of claims” had already being paid out, he added.
“In terms of admissions about what’s gone wrong in terms of insurance, I’m more interested at this point in sorting out the problem for the future than allocating blame for the past.”
Sourced and edited from AAP report.

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