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Storm Insurance

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This fact sheet is for information only. You should get legal advice about your personal situation.

Main ideas

• Know what your policy covers – policies vary between insurers.
• Get evidence of loss and damage. Photos/videos can help.
• Negotiate with the insurer. Tell them how you would like the claim settled.
• Get legal advice if you are unsure about your policy or settlement.

In this fact sheet:

Understand your policy
• Type of cover: replacement or indemnity
• Under or overinsurance
• Additional benefits

Claiming on your policy
1. Contact your insurer
2. The insurer will appoint an assessor
3. Negotiate a settlement

How long should the claim take?

Complaining about an insurer

Keeping on top of your finances during an insurance claim
• Contact your creditors
• Talk with a free financial counsellor

Understand your policy

Your policy is made up of your Product Disclosure Statement and your policy schedule. These documents set out the scope of your insurance cover. Insurance policies vary about what events they cover and what they don’t cover (exclusions). Read your policy to make sure you get all the benefits you are entitled to, and understand what losses are not covered. Read our fact sheet about Understanding your insurance policy.

Most insurance policies will cover you for damage from storm, rainwater and run-off.

Your policy will usually spell out what each of these words mean. It will look something like:

  • Storm: a storm, cyclone or severe atmospheric disturbance which can be accompanied by strong winds, rain, lightening, hail, snow or dust.
  • Rainwater: water falling from the skies that runs off over the surface of the land (many policies include water overflowing from stormwater drains).
  • Run-off: rainwater that has collected or flowed across from normally dry ground or overflowed from pools or spas.

Be careful if you are choosing not to get flood cover, you must check if your policy will still cover you for rainwater run-off or storm surge. For more information about this and flood claims, read our fact sheet about Flood Insurance.

Type of cover: replacement or indemnity

Indemnity cover: The policy will generally cover you for actual losses up to the ‘sum insured’. Your policy schedule or certificate of insurance will state the amounts – for example ‘up to $500,000 for building, $30,000 for contents’.

Replacement cover: The policy will generally cover you for the amount it would cost to replace or repair damaged building/contents to the condition it was in just before the storm.

Under or overinsurance

If you have indemnity cover, underinsurance is when your sum insured is not enough to cover your loss. This can be a problem when there is a widespread natural disaster – increased demand can increase the cost of tradespeople and building materials. Changes in local building codes can also increase costs.

Some insurers offer a ‘safety net’ for an additional premium. For example, ‘Safety net home protection – 25% extra of the home sum insured’.

Overinsurance is where your sum insured is more than you need to cover your loss or damage. Overinsurance can create a buffer to make sure you are fully covered. However, the insurer will only pay the amount of your actual loss if it is less than your sum insured. And you won’t get a refund of the higher premiums you paid.

When you take out a policy, and at every renewal, it is up to you to make sure the amount of cover meets your needs. If you are not satisfied with the amount of cover you are offered, you can negotiate with your insurer or shop around other insurers.

If you were misled by your insurer into getting too little or too much insurance, get legal advice. If you relied on the insurer’s sum insured calculator, get legal advice.

Additional benefits

Check your policy to see what additional benefits you have; these are generally on top of your sum insured. For example:

Emergency or temporary accommodation

If you can no longer live in your home, your insurer may pay for alternative accommodation for a time. For example, your policy may include a clause like: We [the insurer] will pay the reasonable costs incurred by you for comparable accommodation for up to 12 months while your building is being rebuilt or repaired.

Check if there is a limit on the cost of accommodation, for example

  • a percentage of policy sum insured
  • ‘reasonable costs’.

There could also be a limit on the time the accommodation will be paid for, for example:

  • up to a specific period (say, 12 months)
  • ‘reasonable time’.

You may also be able to argue for additional accommodation if you need it because your insurer has acted unfairly towards you (for example, by delaying repairs so your home remained unliveable for longer than necessary). Get legal advice immediately – you may need to argue for these benefits and it may take time.

Demolition / removal of debris

Your policy may cover the cost of removing debris and clearing your land.

Check your policy to see what types of debris are covered. For example, debris from trees, shrubs and plants may not be included.

Architects, surveyors, and legal fees

Your policy may cover for the services of architects, surveyors and legal fees reasonably required to rebuild or repair the building. It may be limited, for example, up to 10% of the sum insured.

Costs of complying with new regulations

Your policy may cover the cost of bringing your home up to standard with new building or safety regulations introduced since your home was originally built. For example: We will also pay any additional costs required for your buildings to comply with government or local authority by-laws.

If you have total replacement cover, you may be covered for additional compliance costs.

Claiming on your policy

Insurers must respond to catastrophes and disasters in a fast, professional and practical way. They must act in a fair and reasonable manner.

Insurance claims management services
Think carefully about whether to hire someone to help you manage the claim. Insurance claims management services are commercial businesses that charge a fee to represent you and do the paperwork on your insurance claim. Understand the risks before signing up. Read our fact sheet about Insurance Claims Management Services.

1. Contact your insurer

If you are unsure whether you will be covered, make a claim and see what the insurer says. Reading a policy can be difficult; contact us if you need help.

Your insurer will have an electronic record of your policy documents, so don’t be concerned if your copies have been lost or destroyed.

Ask your insurer about organising temporary accommodation under your policy. Be careful about your insurer putting you in an expensive temporary property which will use up your accommodation allowance quickly. If it is going to take 12 months to rebuild your home, you will need a sustainable housing arrangement.

2. The insurer will appoint an assessor

The assessor will come to your property to assess the damage and whether you are covered under the policy.

The insurer has the right to inspect your property. They decide whether buildings or contents should be repaired/ rebuilt/ replaced and by who. Talk to your insurer to get their consent before doing any repairs. If you are worried about more damage happening, and your insurer is not doing anything, get legal advice.

While you are waiting for the assessor:

  • Your safety is the highest priority. Only enter damaged buildings if it is safe to do so. Always follow directions of emergency services.
  • Protect your belongings if it is safe to do so. You must take reasonable steps to prevent further damage. For example, you might put a tarp over your contents or move them under shelter. Document what you have done with before and after photos, invoices, and copies of any directions from council or local emergency services.
  • Take photos of damaged items and buildings. Make a list of all the things that have been lost or damaged.
  • Do not throw away of any items unless it is a danger. Try to get the insurer’s permission before you throw anything away. Take photos and keep a record of what you have done.

Some insurers ask for a room-by-room list of damaged items. But if everything is lost, ask them to pay your total sum insured. If they insist on a detailed list, ask why they want it and seek legal advice. The insurer should not ask for a list if they are satisfied your claim is a total loss.

Exclusions that may apply

Possible exclusions for a storm claim may include:

Flood
If your home was damaged by flood, or both rainwater and flood water, the insurer may reject your claim if you don’t have flood cover. Read our fact sheet about Flood Insurance.

Storm surge
If you live in a coastal area, check if you are covered damage caused by storm surge or movements caused by the sea. Sometimes you may be covered if the damage caused by the storm surge happened at the same time as damage caused by the storm.

Wear and tear, gradual deterioration or lack of maintenance
Your insurer must be able to show it is more likely than not that wear and tear or lack of maintenance is a significant cause of the damage.

If you only had minor wear or tear or other issues that had little or no impact on the amount of damage caused by the storm, you should be covered.

If the storm and wear or tear were both significant causes of the damage, and acting at the same time, the insurer can reject the whole claim. For example, if the damage the storm caused was significantly more than it would have been because your roof tiles already had cracks in them, you may not be covered.

If your insurer rejects your claim, ask the insurer for the reasons for the rejection in writing, along with any information and reports they relied on to reject your claim. If you don’t think the rejection is fair, get free legal advice from the Insurance Law Service on 1300 663 464.

If the insurer rejects your claim because you don’t have flood cover, read our fact sheet about Flood Insurance.

3. Negotiate a settlement

Check the amount you are insured for, and for any additional benefits in your policy. Make sure you understand what you are entitled to under your policy.

The insurer can decide whether to repair, replace or cash settle a claim. You can challenge that decision if it is not fair or reasonable, but usually you won’t be able to force the insurer to do repairs for you (get advice if your circumstances prevent you from organising the repairs yourself).

Consider getting your own builder or engineer to review the insurer’s ‘scope of works’ to check it is appropriate. Sometimes the insurer may ask you how you would prefer to settle, and you can negotiate. Be clear about what is being settled – the whole claim or only part.

If you have a mortgage over your home, the insurer may pay your claim directly to your home lender. You then need to negotiate with your lender to release the funds to rebuild or repair. If there is a problem, get legal advice.

Think carefully before accepting a cash settlement offer. Consider:

  • If an insurer repairs or rebuilds, they are responsible for and guarantee the work. If you agree to a cash settlement and hire your own repairer, you will need to sort out any problems about the quality of repairs yourself.
  • Insurers manage the repair process which can sometimes be complicated. If the repair is complex, think about your ability to project manage the repairs and whether the settlement amount gives you enough money to hire someone to project manage the works for you.
  • Insurance companies may be able to get cheaper quotes because of their purchasing power. You may not be able to get the job done for the same price. Get your own quotes to make sure the amount being offered is realistic.
  • Sometimes repair costs are uncertain – a cash settlement may leave you out of pocket. If the insurer insists you do the repairs yourself, ask if the insurer will pay you an uplift (for example an additional 10-25%) on top of your repair quote for unexpected expenses. You usually will not be able to go back to your insurer for more funds later if you run out of money to finish the repairs.
  • In contents claims, the insurer may pay your claim in store credit instead of cash – but only if the policy says they can do this. If the policy doesn’t say anything about store credit, you can ask for cash. The insurer may offer you more in store credit than cash (because they get discounts). Get advice if you think the insurer is acting unfairly.

How long should the claim take?

Once they receive your claim, the insurer should move it forward reasonably quickly.

The insurer should decide your claim within 4 months. If there are exceptional circumstances (including situations such as a major bushfire or flood), the insurer should decide your claim within 12 months. This does not mean an insurer can sit on your claim and do nothing for 4 or 12 months – they must still move the claim forwards during this time, and you can complain if they are not. Read our fact sheet about Insurance claim delays.

If the Insurance Council of Australia declared the storm a catastrophe and the insurer finalises your claim within one month of the bushfire, but you believe the assessment was not complete or accurate, you can ask your insurer to review your claim. You can do this up to a 12 months after the claim was finalised – even if you have signed settlement or release papers.

If you are worried that further damage could happen in the meantime, give details to your insurer and ask if they can do urgent make-safe repairs to prevent that from happening. Get legal advice if they say no.

If you are in urgent financial need, your insurer must fast-track your claim. They must make an advance payment within 5 business days of you demonstrating your urgent financial need. The advanced payment will be deducted from your final claim payment.

Government emergency payments may also be available if you have been affected by a storm. Also contact your lenders – they can offer financial hardship arrangements.

Complaining about an insurer

You can complain if you are unhappy with the progress of your claim, or any decision made by the insurer. You can also complain about the conduct of an assessor, repairer or anyone else hired by the insurer.

Get as much evidence as you can to support your complaint. You may need to get your own independent expert report to argue against the insurer.

First, complain to the insurer’s internal dispute resolution department. You can find contact details on the Australian Financial Complaints Authority (AFCA) website or by phoning 1800 931 678

If the insurer does not resolve the matter and does not respond in 30 days, you can complain to AFCA. Read our fact sheet about Insurance Complaints to AFCA. Time limits apply.

You can also consider court proceedings. Get legal advice first as court is risky – you may end up paying for the insurer’s legal costs. Time limits apply.

Keeping on top of your finances during an insurance claim

Contact your creditors

If you have a mortgage or other loans, contact your lender immediately to ask for hardship assistance. They may allow you to reduce or postpone your repayments for a few months, or they may reduce interest for a time. Some lenders have generous disaster recovery assistance – ask what they can offer. Read our fact sheets about Financial Hardship and Credit Reports.

Utility and telecommunications companies can also provide hardship assistance. If your provider won’t help, contact the Telecommunications Industry Ombudsman through their website or by calling 1800 062 058, or the Energy & Water Ombudsman in your state. Contact details are included in our Useful Links page.

Do not just miss payments while you are waiting for an insurance claim. Most creditors will provide some form of help when there has been a catastrophe.

Talk with a free financial counsellor

Financial counsellors can help you work through the financial implications of your loss and insurance claim. They can put you in touch with community organisations and charities that can provide help with food and emergency accommodation. They can also refer you to other services, like the No-interest loans scheme (NILS), to pay for essential household items such as whitegoods.

You can talk to a free financial counsellor by calling National Debt Helpline on 1800 007 007.

Need more help?

The following fact sheets will provide more information:

Call the Insurance Law Service on 1300 663 464, or contact us through our web enquiry form available on our Accessibility page.

Legal Advice

Other services

  • National Debt Helpline –1800 007 007 for free financial counselling
  • Ask Izzy – an online directory of community assistance programs (such food, clothing, emergency relief, emergency and community housing )
  • Family and Community Services (FACS) Housing Contact Centre 1800 422 322
  • Insurance Council of Australia Disaster Insurance Hotline 1800 734 621

For a list of other resources, visit our Useful Links page.

Last updated: January 2023

 

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Claudia was comprehensive in her investigation of my pds and clearly communicated what my rights are and potential next steps. I have clear next steps to respond to the insurer in this case. Claudia helped to remove the emotional charge for me from this ongoing insurance issue and given me clear steps to resolution. Thank you so much.