Lismore resident loses dispute after opting out of flood/run-off cover – Daily – Insurance News
A Lismore resident whose home was severely damaged by floods will not be compensated for her losses after opting out of “unaffordable” flood and stormwater runoff covers years before the event.
The complainant lodged a claim with IAG following last February’s historic flooding event. The homeowner said she moved her items to an elevation above previously recorded flood levels; however, the waters significantly exceeded the height and reached 2.7m.
IAG relied on a report from an internal assessor which said floodwaters had risen above ceiling height, noting damage to wall and ceiling linings. The report noted “brown water” with a “musty odor” in the home and said water remained on the property for three days. The assessor concluded that flood and rainwater runoff was the sole cause of the damage.
The insurer dismissed the claim, saying the claimant had chosen to refuse flood and rainwater run-off in her 2018/19 policy renewal.
The homeowner said she included flood coverage as part of her policy in 2017, even though she didn’t request it, but she didn’t have it removed because premiums remained at the same cost.
IAG notified the policyholder in a letter accompanying her 2018/19 Certificate of Insurance (COI) of policy changes relating to flood and rainwater runoff cover. The insurer said it would automatically include cover for floods, rainwater run-off and storm surges.
The complainant called IAG on 13 June 2018 to opt out of flood cover after receiving a hefty premium bill, with the insurer sending an amended COI that included in the title “excludes flood, rainwater runoff and storm surge”.
The plaintiff argued that the insurer was “deceptive” by including “storm coverage in the same category as flood” and “hiding it in the PDS”.
The Australian Financial Complaints Authority (AFCA) disagreed with the complainant, saying that the first page of each of her policy renewal documents from 2018/19 “clearly states” that floods, rainwater run-off and storm surges are excluded.
AFCA noted a recorded call dated 29 May 2019 between the policyholder and an IAG representative. The consultant is heard to inform the complainant that the insurer refers to “flood cover” as “flood, rainwater runoff and storm flood cover”.
The judgment determined that the insurer had provided the complainant with relevant documents to inform her of the changes it was making to her policy.
“The policy is clear. It does not cover loss or damage caused by floods, rainwater run-off or storm surges.”
It noted that the woman had suffered financial hardship due to events “outside her control” and was unable to pay the premiums.
“The panel also recognizes that the premiums which include flood, rainwater runoff and storm flood cover were not affordable for most people. However, it is clear that the complainant has no coverage for flood, rainwater runoff and storm surge coverage, most likely due to the premiums charged,” AFCA said.
The panel did require IAG to pay compensation of $2,000 for non-financial losses related to early miscommunication that caused an “unusual degree of inconvenience and stress at a time when the complainant was under extreme stress due to the floods”.
Click here for the verdict.