Compare storm damage insurance options

In Australia, standard home insurance and contents insurance policies typically include coverage for storm damage. As the name suggests, a policy that includes storm damage insurance should cover the policyholder for damage to your property caused by wind, hail, rain, lightning, snow or dust. 

Oftentimes, insurance policies will group storm damage into the category ‘storm, rainwater and run-off’. According to FinancialRights.org, this typically refers to:

• “Storm: a storm, cyclone or severe atmospheric disturbance which can be accompanied by strong winds, rain, lightning, hail, snow or dust.
• Rainwater: water falling from the skies that runs off over the surface of the land (many policies include water overflowing from stormwater drains).
• Run-off: rainwater that has collected or flowed across from normally dry ground or overflowed from pools or spas.”

The specific events and details that may be covered under storm damage will depend on the insurer and your policy. It’s worthwhile reading the terms and conditions as well as the Product Disclosure Statement (PDS) before proceeding for full details.

That being said, the following events may generally be covered in a policy that includes storm damage:

• Earthquakes
• Hail damage, including dents, cracks, and other impacts to your property
• Fallen trees and branches
• Damage caused by strong wind and debris
• Lightning damage
• Damage from rainwater (may not include flood damage), including run-off rainwater

There are two main types of cover available to choose from:

Indemnity Cover

This coverage involves compensating the policyholder for the actual losses incurred due to a covered event like a storm, up to the ‘sum-insured’ amount.

The "sum insured" is the maximum amount that your insurance company will pay out for your claim. This sum is usually stated in your policy documentation. For instance, if your policy specifies "up to $750,000 for building and $60,000 for contents," these are the maximum amounts that the insurance company will provide for repairs or replacements.

Keep in mind that indemnity cover considers wear and tear, meaning the insurer will account for the age and condition of your property and/or contents when you make the claim. If your building or contents have depreciated in value, the insurance payout might be adjusted accordingly.

Put simply, indemnity cover may see you compensated for the value that the damaged property had just before the storm, factoring in its age and wear.

Replacement Cover 

With replacement cover in your insurance policy, the focus is on bringing your damaged property back to the condition it was in before the storm occurred, without considering depreciation. 

This means that the insurance company will cover the cost of completely replacing or repairing the damaged building or contents, regardless of their age or wear.

For example, if a storm damages your roof and your policy has replacement cover for your home, the insurance company ideally will pay you the amount it would cost to repair or replace the existing roof with a new one - regardless of its age or wear.

Your home insurance policy might provide protection against a variety of adverse incidents, while the exclusions could vary based on the chosen policy. The potential natural events that could lead to loss or damage to your property, covered by home insurance, may include:

• Earthquakes
• Toppled trees
• Fires
• Floods (if applicable)
• Lightning strikes
• Rainwater, including excess runoff and overflow
• Storms

As a general rule of thumb, a home insurance policy typically encompasses your entire property, including permanent structures like garages. However, it's important to note that not all policies will extend coverage to losses or damages caused by floods or storm surges. It’s crucial that you go through a policy with a fine-tooth comb to examine the extent of coverage provided, as well as any limitations or exclusions.

Not all instances of storm damage fall within the scope of home insurance coverage. Some common exclusions may include:

• Storms occurring shortly after taking out the policy (typically within a week)
• Water intrusion from non-storm sources (i.e. openings or vulnerabilities not directly caused by the storm, such as pre-existing leaks or poor maintenance
• External features such as textile awnings, blinds, and shades
• Covers for swimming pools and spas

Remember, it's essential to meticulously review your Product Disclosure Statement (PDS) to ascertain precisely what falls under coverage and what doesn't. If uncertainties persist, it's advisable to reach out to your insurer for clarifications.

Most policies should cover damage caused by rainwater run-off, but not for damage caused by tidal flooding or rising seawater. The source of the water damage will be a major factor for the insurance company in determining whether to cover flood damages. 

Due to the prevalence of flooding events in Australia, not all insurers will cover homeowners for flood damage. This is particularly true of areas where flooding has a higher likelihood where coverage may not be available, or may be significantly more expensive. In fact, past catastrophic flooding events in New South Wales and Queensland have seen residents push the federal government to intervene where skyrocketing premiums are being referred to as an insurance ‘crisis’. 

Many insurance companies will have exclusions for flood damage, including:

• Searise events, such as storm surges, high tides and king tides
• Flash flooding from creeks, rivers or even heavy rains
• Flood water combined with run-off or rainwater
• Blocked piping or gutters result in flooding
• Structural faults or defects resulting in rainwater entering the home
• Rainwater or wind damage through open doors or windows. 

This means that it is crucial you compare policies thoroughly to see if flood damage is covered, including the ability to claim repairs to home and contents, replacement of contents, rebuilding costs and even temporary accommodation.