Flood-devastation in Picton, on the outskirts of Sydney, left many homes and businesses suffering extensive damage earlier this year.
Reports soon emerged from locals who said one of the businesses affected was the local branch of
IAG-owned
NRMA Insurance, according to
mybusiness.com.au.
They said the branch found itself not covered because of ‘a disputable clause around what constitutes flood damage versus storm damage’, the
mybusiness.com.au report said.
The direct insurer had not responded to requests for comment on the matter.
The
Insurance Council of Australia (ICA) had previously outlined the definition of flood damage for insurance purposes, but said many business owners were still being caught out on it, and other fine print clauses in their policies.
The incident prompted a warning from risk management consultant Rick Stone, of Tigertail, about how important it was to fully understand the fine print before taking out a policy.
“The thing about insurance is it will cover only what you buy, so you need to be really careful and really clear about what you are insuring and what the coverage is,” Stone said in the report.
“The insurance company is there to make money… the same as the rest of us are, and we need to be aware of that: they are not a charity.
“I don’t know about you, but I’ve never seen an insurance company that’s operating from a tin shed out of the back of a cheap block of land somewhere.”
Stone recommended speaking to specialist brokers to ensure cover is appropriate.
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