Water, whether caused by a flooding river, burst water pipe or storm, can cause extensive damage to your home, contents and other assets.

It’s important to understand the different types of floods and other water-related events and how they may be covered under your Insurance policies.

Flood insurance is often built into a range of insurance policies, including home and contents, strata title, motor vehicle and business insurance policies.

The risk of a flood occurring is reflected in the cost of the premium – property owners with a high risk of flood will pay a higher premium than other property owners.

Insurers treat flood in different ways in their policies:

  • Many insurers include flood cover as a compulsory part of taking out a household policy
  • Some insurers include flood as a standard inclusion, but allow the policyholder to remove it– this is known as opt-out flood cover
  • Some insurers will cover flood in policies only up to very low defined values – for instance, damage of $15,000 or less
  • Some insurers will not cover flood under any circumstances

Flood definition

Australian regulations include a standard definition of flood, which was introduced in June 2012.

It applies to home and contents, small business and domestic strata-title policies.

The standard definition of flood in Australia is:

The Covering of normally dry land by water that has escaped or been released from the normal confines of:

any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or

any reservoir, canal, or dam.

Even if your policy excludes flood damage, your policy may still cover you for events such as storm damage or rainwater damage. Storm or rainwater cover in your insurance policy may cover the situation where your house becomes inundated by rainwater that has fallen naturally from the sky. Though most insurers regard rainwater runoff as part of storm cover, some insurers won’t cover rainwater runoff or storm surge when the customer chooses not to take flood cover. These options are explained in the product disclosure statement for your policy.


Most properties in Australia have little or no flood risk. Insurers believe only about 2.8 per cent of properties have moderate to extreme risks of flooding, and about 7 per cent have some exposure.

About 80 per cent of insurance losses from floods occur in areas that have been flooded in the past.

Governments are responsible for assessing and mapping the flood risk to communities. They use this for infrastructure and town planning, and for working out how they can lower the risk of flood for existing communities.

Flood maps can be influenced by the number of different factors including building development, road works, new agricultural growth, changes to river and creek catchments, as well as changes to drainage and sewer arrangements for your area.

Unfortunately, many parts of Australia that have flood risks lack adequate flood data or have outdated flood maps. Most jurisdictions are working hard to improve the accuracy and availability of their flood information.


During flash flooding, floodwater is produced by high-intensity but short-duration storms that produce localised flood conditions that might affect your house if you live on sloped land. Most policies cover this flood risk, but check your policy carefully if you have a particular risk for this kind of damage, for example if your house is at the bottom of a slope.