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Australia Did flood or storm ruin Eugowra’s homes? Thousands of dollars rest on the answer

07:40  26 november  2022
07:40  26 november  2022 Source:   smh.com.au

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Anger is building in the devastated Central West town of Eugowra over insurance companies’ failure to cover water damage that residents – who have been paying premiums for decades – argue was caused by storms or runoff rather than floods.

Few had cover for floods, which are defined for insurance purposes as water escaping from a body such as a river or creek, because the premiums would have cost about $40,000 a year. However, many did have policies that covered storm damage.

The problem becomes more complex if the damage was caused by runoff, or water that runs off usually dry ground, as some insurance policies class that as flood-related, but others do not. So far, there have been 3149 claims from the most recent flooding in the Central West.

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Flash flooding in Eugowra destroyed the town. Some houses were washed off their foundations. © Rhett Wyman Flash flooding in Eugowra destroyed the town. Some houses were washed off their foundations.

One resident whose contents were insured for $60,000 was told by NRMA Insurance that he would get $500. For extensive damage to a building insured for $450,000, he would get just over $2000. “I feel totally broken,” he said on a local Facebook group, as other residents told him they had received similar feedback.

An NRMA insurance spokesperson said those payments were intended to help the residents while full assessments were under way.

Another resident, John Dukes, said the 120mm of rain that prompted a “wall of water” in Eugowra early last week was nothing like the rising flood in nearby Forbes. “It wasn’t a flood, it was stormwater or a tsunami,” he said. “A flood rises slowly, this washed houses off blocks.

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“If they call it a flood, no one will [get any money]. If they call it storm damage, there’s a possibility that it’s got to be paid.”

Dukes has lodged a claim and has not heard back, but is speaking to neighbours who have had their claims refused. “People are really angry [about it]. I’ve had this house insured for 30 years with NRMA. I’ve paid more than $90,000 for no claims at all.

“Imagine how much money they’ve got out of this town in the past 20-30 years.”

Dukes said anxiety about insurance was another stress for a town that had lost so much over the past fortnight, and would on Monday bury a much-loved member of its community, local doctor’s receptionist Diane Smith.

The federal member for Calare, the Nationals’ Andrew Gee, said there was deep confusion and anxiety about claims. “While these are contracts, I think insurers need to be assessing these claims in a generous and kindhearted away,” he said.

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“Communities around Australia would expect nothing less. There’s a lot of people who’ve lost absolutely everything and it’s a lot to deal with. The whole uncertainty regarding insurance is adding a whole new layer of angst and frustration.

“Many are feeling quite devastated that having been loyal customers and paid these premiums over a long period of time, the insurance companies may not be sticking by them.” Legal aid has set up an information service in the flood-hit area, and can advise on insurance contracts.

In a statement, an NRMA Insurance spokesperson said a claims team was on the ground in Eugowra to help with emergency payments for food and temporary accommodation, while assessors were in the process of looking at damage to homes.

“Our home and contents policies provide cover for storm damage where water has entered through the roof or windows, even if the customer has opted out of flood, rainwater run-off and storm surge cover,” the statement said.

A spokeswoman from the Insurance Council of Australia said there had been more than 3000 claims lodged due to the most recent flooding in the Central West.

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The government introduced a standard definition of flood in 2012, which involves water escaping from the normal confines of a body such as a river, lake or creek. There is no standard definition for storm. “A simple way to think about it is that storm water comes down or through a property, while flood water rises,” the spokeswoman said.

The spokeswoman said insurance customers should discuss their concerns with their insurer. “The Insurance Council of Australia encourages policyholders who are unhappy with any part of their insurance claim experience to contact their insurers’ Internal Dispute Resolution (IDR) team,” the spokeswoman said.

If they are unhappy with the outcome, they can lodge a dispute with the Australian Financial Complaints Authority (AFCA).

IAG, which underwrites NRMA Insurance, was contacted for comment.

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Key points

Eugowra residents who wanted floods coverage would have faced insurance premiums of about $40,000 a year.

There have been 3149 claims from the most recent flooding in the Central West.

The government introduced a standard definition of flood in 2012. There is no standard definition for storm.

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