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In Australian home and contents insurance, flood has a single standard legal meaning: normally dry land covered by water that has escaped from a lake, river, creek or other natural watercourse, or from a reservoir, canal or dam. Flood is covered by many home policies as standard, offered as an option by others, and excluded by some, especially in high-risk areas.
The standard definition matters because damage from water falling from the sky, overflowing stormwater drains or run-off is generally treated as storm, not flood. A policy that excludes flood can still cover rainwater damage, and the way a claim is described decides which part of the policy it falls under.
By Better Rate Mate Editorial Team · Last reviewed
The definition is set in regulation 34 of the Insurance Contracts Regulations 2017 and applies to home building, home contents, combined home, strata title residence and small business property policies, whatever the policy wording says. It first became law in 2012 and became mandatory in June 2014 after a two-year transition, which means you can compare flood cover between insurers on the same terms. Moneysmart quotes it as the covering of normally dry land by water that has escaped or been released from the normal confines of any lake, river, creek or other natural watercourse (whether or not altered or modified), or of any reservoir, canal or dam.
Before the standard definition, insurers used their own wording and many consumers only discovered after an event that the water that entered their home was not flood under their policy. A common definition does not mean every policy covers flood; it means that when a policy says flood, it means the same thing.
Water damage claims are assessed by cause. The table below shows how the main causes are usually treated, based on Moneysmart's guidance and typical policy structure.
| Cause of the water | Usually treated as | Notes |
|---|---|---|
| River, creek or lake breaks its banks | Flood | Covered only if the policy includes flood |
| Dam, reservoir or canal overflows or is released | Flood | Covered only if the policy includes flood |
| Heavy rain entering through a storm-damaged roof | Storm | Usually covered as standard |
| Rainwater run-off across the ground, overflowing stormwater drains | Storm or rainwater | Moneysmart notes this is usually covered under storm |
| Burst pipe or leaking appliance | Escape of liquid | Gradual leaks are commonly excluded |
| Storm surge, sea or tidal water | Actions of the sea | Commonly excluded from home policies |
Since November 2014, home building and contents insurers have had to provide a Key Facts Sheet in a format set by the Insurance Contracts Regulations, within 14 days of you asking about or buying a policy, and to publish the current version on their website. It includes a table showing whether each event, flood among them, is covered, not covered or optional. It is the quickest way to check a quote or a renewal. The PDS then gives the detail, including any sub-limits.
Some insurers include flood automatically and do not let you remove it, some include it but let you opt out to lower the premium, and some offer it only as an option. If you are offered a policy without flood, find out whether your address is actually in a flood-prone area before deciding: your council, state emergency service or insurer can tell you about flood mapping and historical flood records.
Premiums are set address by address, using flood models that estimate how often and how deeply water is likely to reach a property. Where the modelled risk is high, flood can make up much of the premium. Moneysmart notes that if your home is at a high risk of flooding, cover may be more expensive or flood may be excluded. Flood mitigation work by councils and governments, and property-level measures such as raising floor levels, can change an address's risk rating over time, so it is worth asking whether your insurer takes them into account.
Since 1 July 2022 the Australian Reinsurance Pool Corporation has run a cyclone reinsurance pool backed by a $10 billion Commonwealth guarantee. It reinsures home and contents (including landlord), residential strata and small business property policies for cyclone damage and related flood, including storm surge and riverine flood, during a cyclone event period that runs until 48 hours after the cyclone ends. It operates Australia-wide but matters most in cyclone-prone northern Australia, where the ACCC's Northern Australia Insurance Inquiry found premiums were far higher on average than elsewhere. Its purpose is to lower reinsurance costs and so premiums. North Queensland residents can also use the government's North Queensland home insurance comparison website.
Photograph damage before cleaning up, keep samples of carpets and damaged materials if you can, and contact your insurer as soon as it is safe. Many insurers will arrange emergency repairs and temporary accommodation. Under the General Insurance Code of Practice, subscribing insurers must decide a claim within 10 business days of having all the information they need, and overall within 4 months, with up to 12 months allowed for an extraordinary catastrophe. They must update you on progress at least every 20 business days. If you disagree with a decision, use the insurer's complaints process first, then the Australian Financial Complaints Authority, which is free.
Many home and contents policies include flood as standard, some make it optional and some exclude it. The Key Facts Sheet for the policy states whether flood is covered.
Flood is water escaping from a natural watercourse, lake, reservoir, canal or dam onto normally dry land. Storm covers damage from wind, rain, hail and lightning, and usually includes rainwater run-off and overflowing stormwater drains.
Usually yes, but it can cost significantly more, and some insurers may exclude flood at high-risk addresses. Getting several quotes matters more for flood-exposed homes than for almost any other.
Only if the policy includes flood. Contents and building cover follow the same standard definition.
