Flood definition now law
THE standard definition of flood is now law, after the Federal Government this week enacted the regulations to give effect to the definition.
Financial Services Minister Bill Shorten said the regulations provided for a two-year transition period, which "will provide insurers with a sufficient lead time to update the content of product disclosure statements, retrain staff and implement any necessary system changes".
The standard definition was finalised last November and has since been awaiting ministerial approval.
It applies to home building and contents, small business and strata-title insurance contracts across Australia.
Mr Shorten said under the regulations the word "flood" in an insurance contract will mean:
"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".
He says the standard definition makes it easier for people to know what they are covered for, and what is not covered.
"A flood is a flood," he said.
"Never again do Australians want to see a situation - as we saw during the Queensland floods of 2011 - where neighbours hit by the same flood get different levels of cover because of technical definitions in an insurance contract."
Mr Shorten said the government recognised that many insurers had already adopted the standard definition. He urged all insurers to now do the same.
Insurance Council of Australia chief Rob Whelan welcomed the move, saying the standard definition "has long been a goal of the general insurance industry" and will give property owners and insurers greater clarity and piece of mind.