How to decide if you need flood insurance

Insuring your home against a flood is a cost that can skyrocket, depending on where you live. Here's what to know about getting the right comprehensive insurance for your needs.

By Carolyn Tate

A 2023 Federal Treasury analysis found that a whopping 68% of Australians lived in an area affected by a natural disaster – mostly flooding.

The reality is, when water starts to rise, there's nothing you can do to get your home out of the way. Which is why comprehensive insurance is important.

But one in 8 Australians are facing home insurance affordability problems, with climate-disasters forcing up the price of insurance by nearly one-third in the last year.

Whether you rent or own your home, understanding your flood risk and weighing it up against your insurance options is important.

What’s your flood risk?

Firstly, appearances can be deceiving. Even if you don’t live next to a body of water, your property may still be prone to flooding.

Check your local council’s flood maps (usually available online), which show  historical data from previous floods, as well as flood risk modelling. You can also see the floodplain management plans, which help you gauge your property's exposure to potential flood hazards and should give you a comprehensive understanding of your flood risk.  There is also a national flood risk information portal you can look at online.

How's your risk tolerance?

Deciding whether you need flood insurance ultimately comes down to two factors: your property's location and your personal risk tolerance level.

If your home is situated in a flood-prone area, you'll likely consider flood insurance a must unless you have a particularly high tolerance for risk. But plenty of locations across the eastern seaboard have experienced a massive price hike in premiums.

If you’re in a lower-risk region, you might decide to prioritise different types of cover or take the risk of not insuring and committing to covering any expenses yourself if the unexpected happens.

Cover you need if you own your home

Homeowners will usually want to make sure they are covered for the property structure and all assets kept in the home. Talk to your insurer to understand the flood-related policy details. Questions to ask include:

• How does my insurer define ‘flooding’?
• Am I covered for storm damage and flood damage (water coming from overflowing storm drains or weather-related incidents like cyclones can be treated differently from water coming from overflowing rivers or dams, for example)?
• What exactly is covered, and what is not? Does my insurance cover structural repairs, contents replacement and temporary accommodation?
• Are outdoor items like sheds, gardens, gardening equipment or fences included in the cover?
• Are there ways to reduce flood insurance costs (for example, not leaving the home unoccupied for long periods, or making sure your home is in a good state of repair)?

Cover you need if you're renting

If you rent, you may want to consider renter's insurance, which can protect your possessions from flood-related damage. That's because your landlord's insurance (if they have it) will usually only cover the building's structure if your home is flooded, but not your personal belongings.

It's also a good idea to be proactive and talk to your landlord about property safeguards and flood preparedness.

What you can do to minimise your risks

You can take measures to significantly reduce your flood risks. Many new homes and rebuilds in flood-prone areas have been elevated higher off the ground in recent years, which is something that has a high price tag, but can be considered. You can also try to create effective drainage systems around your property to move potential floodwater away from the home - read the Queensland Government's flood resilience building guidelines.

In the event of a flood, stay informed about local flood alerts and listen to emergency services directions. ABC emergency offers realtime national updates on floods, storms, bushfires and more.

When to review or update your policy

Review your policy each time it comes up for renewal. You should also re-evaluate your policy whenever your property undergoes structural changes..

Take photos of everything and keep comprehensive records somewhere other than your home (storage of files in the cloud is recommended because you can access them from anywhere, even if you lose your computer).

Be vigilant about policy updates to ensure your coverage remains relevant and effective, so you’re not caught short.

What to do if you are affected by flood

If you do have the unfortunate experience of being affected by a flood, prioritise safety above all else. Follow any evacuation orders and don't hesitate to leave your home if advised to do so.

Notify your insurer as soon as you can, providing comprehensive documentation of any damages through photographs and detailed descriptions.

In addition, talk to emergency services and support organisations about any additional services and support available to help you recover. Read more about flood insurance claims on the Financial Rights Legal Centre website.