High-risk flood zones – is my property covered?

The last couple of years have seen catastrophic floods ravage parts of the country – bringing devastation to communities and property owners – and resulting in huge insurance claims and huge losses for insurance companies. The ‘ripple effect’ continues with inevitable changes to flood cover. Read on for the details… 

Floods are nothing new. What is new is the frequency and severity of those floods. In fact, some of the most devasting floods in our history have occurred in the last decade or so, including the February/March 2022 floods that impacted Southeast Queensland and northern New South Wales.  

According to the Insurance Council of Australia (ICA), it was the costliest natural disaster in history, with insured losses topping $6.1 billion across 243,000 claims. The ICA also notes that flood events accounted for more than 54 per cent of losses from declared insurance events in the last five years, and 2022 was a record year for flood losses, with in excess of 300,000 flood claims totalling more than $7.4 billion.   

Unfortunately, flood events are a seasonal reality and several factors, including the impacts of climate change, mean that such flood events will continue to be experienced in the future with the severity likely to increase – and the losses mounting. 

Considering this, the insurance industry has had to re-assess the viability of continuing to offer flood cover for high-risk properties. To help our landlord and agent clients come to terms with the evolving insurance landscape, we have answered some common questions relating to flood cover and why EBM RentCover made the decision to halt cover in high-risk flood zones…  

Can EBM RentCover protect properties in high-risk flood zones? 

Since 2015, we have automatically included flood cover for all clients. And, we have done so at a competitive price. However, based on the losses incurred over the last few years, the modelling of future losses and the costs associated with offering the cover, we can no longer continue to offer flood cover for high-risk properties. 

What does ‘high-risk’ mean? 

High-risk refers to properties in flood-prone zones, which is determined by an assessment of the level of flood risk based on flood maps and historical claims data.  

Why did EBM RentCover make this decision? 

This decision was a matter of sustainability. Continuing to provide cover for properties in high-risk zones is no longer a viable option. We can and will continue to provide specialist cover at a competitive rate for landlords with property outside of flood-prone zones, but we are no longer issuing policies with building cover for properties in high-risk flood areas. 

How do I tell if my property is in a high-risk flood zone? 

Generally speaking, if your property is located in a low-lying area or near a river, lake, creek or major stormwater drain, it’s possible that your property is at risk of flooding. And, if your property has flooded previously, it’s likely to be considered high-risk. 

The easiest way to check the flood risk is through the local council. Most councils have publicly available flood maps and floodplain management reports online. If these aren’t available online, get in touch with your council via phone, email or in-person and request access to flood risk data. Queensland, New South Wales, Australian Capital Territory, Victoria, Tasmania, South Australia, Northern Territory and Western Australia also offer state and territory-level flood maps online. 

What does this change mean for EBM RentCover clients? 

If you own a rental outside of a high-risk zone, it’s business as usual. You can take out or renew any of our landlord insurance policies including those with building cover and still have flood cover automatically included. If you own a high-risk property, you can no longer take out or renew any of our landlord policies with a building cover component. Existing EBM RentCover policyholders with property in high-risk areas will be contacted by a member of our Expert Care team prior to the policy renewal date to discuss options. 

Can I still take out a building insurance policy with the exclusion of flood cover? 

We are not able to issue a policy with building cover with an exclusion for flood cover or offer flood cover as an add-on.

Can I still take out a contents-only policy? 

If your property is in a high-risk flood zone, you can still take out or renew a contents-only policy. These policies provide cover for landlord-owned contents and cover tenant-related risks such as loss of rent and damage caused by tenants, their guests and their pets. But it’s important to note that these contents-only policies do not provide any cover for damage to the building structures at all. If you take up one of these policies you need to be aware that you are not protected against any damage to the building from any event – not just flood, but fire, storm, theft, impact by vehicle and so on. 

You can consider taking out a contents-only policy with EBM RentCover and enjoy the benefits of our specialist landlord insurance and seek cover for the building from another insurance provider. However, it is important to note the EBM RentCover policy would not offer cover for loss of rent that stems from building damage or repairs off the back of a natural disaster or other insured event. 

What else is being done to mitigate this issue? 

The availability and affordability of insurance for properties is just one of several issues facing flood-prone areas. Governments at all levels, the property industry, building and construction industry, emergency services, and insurance industry are looking at these issues and how to address them in a sustainable way. Several different factors, including where property development can occur, building codes, flood mitigations, resilience and insurance gaps are being reviewed.  

What tips do you have for looking after property in flood-prone zones? 

With cover for flood damage now so difficult to secure right across the industry, it’s more important than ever that property owners do all they can to protect their assets. The Insurance Council of Australia has some tips for protecting properties before, and in the event of, a flood.  

If you have any questions about flood cover for your rental property, please get in touch with a member of our Expert Care team – 1800 661 662. 

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.