Home buyers warned of potential ‘freeze’ on insurance policies during disaster season

Home buyers are being warned of a potential “freeze” on their insurance policies as a triple La Nina threatens to wreak havoc on South East Queensland in the coming months.

Home buyers are being warned of a potential “freeze” on their insurance policies as a triple La Nina threatens to wreak havoc on South East Queensland in the coming months.

It comes as a host of leading insurance providers introduced “temporary” embargoes on the sale of new policies or people amending their existing policy during the February floods. 

EBM RentCover managing director Sharon Fox-Slater said embargoes on insurance policies are “normal practice” and “usually” take effect when a fire, flood or cyclone is “likely” to impact an area.  

Ms Fox-Slater said earlier in the year EBM RentCover placed embargoes on “many Queensland suburbs that were experiencing flooding”.

“This was because the risk was either already occurring or imminent, and insurance policies do not typically offer cover for known or likely events,” she said.  

Compare the Market’s Insurance expert Stephen Zeller said it is important for residents to evaluate their current level of cover or take out protection “well in advance” of disaster season to “prevent claims from being impacted by embargoes and waiting periods”.

It comes as new data shows up to a 96 per cent increase in property sale listings across suburbs of the Sunshine Coast, Brisbane and Ipswich.

Mr Zeller said an insurance provider may also impose a “no-claims period” on new policies.

“We know how unpredictable our weather events can be; if you wait until a disaster is imminent or already occurring, it’s usually too late to lock in protection,” he said.

It comes as the Bureau of Meteorology predicts much of the country, including South East Queensland, will receive above average rainfall between August and November coupled with a 70 per cent chance of a third La Nina forming by early Spring.

Mr Zeller said although many home and contents insurance policies do cover storms and damage caused by things like hail, rainwater, winds, cyclones and lightning, flood cover is “often an optional extra”.  

“If you already have cover, check your policy to understand what’s covered, how much you’re covered for and how much excess you’ll need to pay if you have to claim,” he said

“Also, pay careful attention to any exclusions and terminology around storms, weather events and flooding.”

There were 110,434 Queensland claims lodged for the February/March floods as at July 25. Picture: Richard Walker

Ms Fox-Slater said embargoes “prevent people buying insurance when risks are high”.

“Usually once the threat of flood has passed and the risk is reduced, embargoes are lifted, and cover can once again be taken out,” she said.

“EBM RentCover clients who already have cover leading into flood season are not impacted by embargoes - that means they are covered for flood (as long as their claim meets the terms and conditions of their policy),” she said. 

An Insurance Council of Australia spokeswoman said insurers calculate premiums at “address level”.

“No two properties have the same risk profile even if they are located side-by-side or in the same street,” she said.

According to the ICA there were 110,434 Queensland claims lodged for the February/March floods with an estimated loss value of $2.51B, as at July 25.

While all policies differ, insurers may exclude any damage caused by:

- storm surges, king tides and high tides caused by the sea

- flooding caused by blocked stormwater drains, gutters or water pipes

- damage caused by leaving windows or doors open

- rainwater damage caused by lack of maintenance, faulty designs or structural defects.