The recent flooding events across parts of Queensland and New South Wales have highlighted a problem many Australian homeowners don’t realize they have: inadequate or absent flood coverage in their home insurance policies. I’ve been talking with friends and neighbors who assumed they were covered for flood damage, only to discover they weren’t when they needed to make a claim.

Here’s what you need to understand about flood insurance, because the details matter more than most people realize.

What Actually Counts as a Flood?

This is where things get complicated. In insurance terms, a “flood” has a specific definition that’s different from everyday usage. According to the Insurance Council of Australia’s standard definition (which most insurers use), a flood is “the covering of normally dry land by water that has escaped or been released from the normal confines of a lake, river, creek or other natural watercourse, whether or not altered or modified, or a reservoir, canal or dam.”

What that means in practice:

• Water overflowing from a river or creek onto your property: That’s a flood
• Stormwater that can’t drain away fast enough and floods your home: That’s usually not considered a flood
• Water backing up through stormwater drains and entering your home: That’s typically storm damage, not flood

The distinction matters because many policies that exclude flood damage will still cover storm damage. But if the water came from a river or creek overflow, your storm damage coverage won’t help you.

Standard Home Insurance Often Excludes Flood

Here’s what catches people out: basic home and contents insurance policies often exclude flood damage by default. You can usually add it as an optional extra, but many people don’t realize they need to.

This wasn’t always the case. Before the major reforms in 2013, the insurance industry didn’t have a consistent flood definition, and many policies were vague about what was covered. The current standardization has made things clearer, but it’s also made it more obvious when you don’t have flood cover.

How to Check Your Coverage

Don’t assume you’re covered just because you have home and contents insurance. Here’s what to do:

1. Find your policy document (not just the summary, the actual Product Disclosure Statement)
2. Look for the section on flood damage – it should explicitly state whether it’s included or excluded
3. Check if you’ve purchased flood cover as an add-on – look at your policy schedule
4. Understand what’s covered and what isn’t – even with flood cover, there are often sub-limits and exclusions

If you can’t find clear information in your policy documents, call your insurer and ask directly: “Am I covered if flood water from a nearby creek enters my home and causes damage?” Get the answer in writing.

Strata Insurance and Flood Coverage

If you live in an apartment or townhouse, there are two layers of insurance to consider. The strata corporation should have building insurance that covers common property, but you need your own contents insurance and potentially additional building coverage if you’re responsible for internal fixtures.

Critically, just because the strata policy includes flood cover doesn’t mean your personal contents are protected. You need to ensure your own contents insurance includes flood cover if you want your belongings protected.

Also be aware that in strata buildings, water damage can come from multiple sources – burst pipes from upper units, groundwater seepage, or external flooding. Each might be treated differently by insurance policies.

The Cost of Flood Coverage

Adding flood coverage to your policy isn’t free, and the cost varies dramatically based on your location. If you’re in a known flood zone, the additional premium can be substantial – sometimes doubling or tripling your base premium.

For properties in low-risk areas, the additional cost might only be 10-20% extra. The pricing reflects actual flood risk based on detailed mapping and historical data.

Some people in high-risk areas find that flood insurance is either unaffordable or unavailable through standard insurers. In those cases, you might need to look at the Australian Government’s disaster relief arrangements, though these provide much less comprehensive coverage than insurance.

What Flood Cover Actually Includes

Even when you have flood cover, understand what’s included:

Usually covered:

• Structural damage to the building
• Damage to carpets and flooring
• Damage to contents from flood water
• Temporary accommodation costs if your home is uninhabitable

Often excluded or limited:

• Landscaping and retaining walls (often have low sub-limits)
• Swimming pools and spas
• Fences (sometimes excluded or capped at low amounts)
• Damage from gradual seepage or rising damp

Read your policy carefully to understand the specific inclusions and exclusions.

Making a Claim

If you do experience flood damage, here’s what to do:

1. Contact your insurer immediately – most policies require prompt notification
2. Document everything – take photos and videos of the damage before cleaning up
3. Keep damaged items until the insurer assesses them (unless they’re health hazards)
4. Keep all receipts for emergency repairs and temporary accommodation
5. Don’t start major repairs until the insurer has assessed the damage

The claims process for flood damage can be slower than for other types of claims because there are often many claims being processed simultaneously after a flood event.

Is Flood Cover Worth It?

This depends entirely on your individual circumstances. Consider:

• Your property’s flood risk (check your local council’s flood maps)
• Your financial ability to absorb a major loss
• The cost of the additional premium
• The value of your home and contents

For properties in genuine flood zones, flood insurance is almost certainly worth it if you can afford it. The potential loss from a flood event can be catastrophic – easily reaching hundreds of thousands of dollars for building repairs and contents replacement.

For properties in low-risk areas, the calculation is different. The premium might be low enough that it’s worth having for peace of mind, even if the probability of needing it is small.

Climate Change Considerations

This is uncomfortable to discuss, but important: flood risk is changing as climate patterns shift. An area that was historically low-risk might see increased flood frequency or severity over the coming decades.

When assessing whether you need flood cover, don’t just look at historical flood data – consider whether your area might see increased flood risk in the future. This is particularly relevant for coastal areas and properties near rivers or creeks.

The Bottom Line

Most Australian homeowners should at least investigate whether they need flood coverage, even if they ultimately decide not to purchase it. The decision should be informed and deliberate, not based on assumptions about what’s included in standard policies.

If you’re in a flood-prone area and don’t have flood cover because it’s unaffordable, at least understand that gap in your coverage and plan accordingly. You might need to maintain a larger emergency fund or accept higher risk.

For everyone else, check your policy, understand what’s covered and what isn’t, and make an informed decision about whether to add flood coverage. The few minutes it takes to review your policy could save you enormous financial hardship if the worst happens.