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Once upon a time, a man’s home was his castle. Then, according to an Australian song about a massive weather event in 1974 that left an indelible mark on the Australian psyche, Cyclone Tracy, “a big wind came and blew the town away.” We all know, of course, that The Three Little Pigs also lost two of their houses. Was the huffing and puffing considered a natural disaster and, if so, were those crazy kids covered by their home insurance policy? Are you?
After decades of green house gas emissions we are now living an era where natural disasters will be increasingly prevalent. Cyclones, flash flooding, storms, fires and drought will be increasingly common TV news fodder. Governments and insurance companies are gearing up for these “freak” events. You may already have home insurance but it might be time to check the fine print.
Variations in home insurance for natural disasters
The short story is that natural disaster cover is a bit of a mish-mash at the moment. What is covered and what isn’t varies considerably from provider to provider as do the definitions of what constitutes a natural disaster. If there’s a landslide and your house foundations are compromised, does your claim fall under flood, earthquake or storm? The semantics of it all can be quite confusing and contradictory. It’s a trap for the unwary. Perhaps it is for this reason that in the event of a natural disaster the Government usually has to fork out a whole heap of cash – so many things are just not covered by private companies and many home owners often find themselves left well short. However, the Government contributions usually go towards infrastructure first, individuals second.
To give you a bit on an idea of just how complex this area is we have approached various companies for information and examples. What we found was the RACWA will cover your home for damage caused by storms, strong winds or, as Shakespeare called it, tempest. In Western Australia there’s not much call for earthquake insurance but the RACWA will cover you for that too. However, GIO will cover you for storm and tempest but not earthquakes. Fire, burst pipes and lightning strikes however are covered by GIO – but check the conditions. And, dig further and you’ll find that the policy variations are as numerous as the number of insurers. (As an interesting aside – GIO will also pay up for unexpected events such as damage caused by a satellite falling from space, falling power or communications poles and towers and up to 50 percent of the costs of damage caused by flash floods.)
A word to the unwary home owner – the dictionary definition of a natural disaster is probably very different to the definition your insurance company has. You will need to make sure you are 100% across their definition in case of an emergency.
What home insurance will and won’t cover
Most companies provide cover against breakage of fixed glass, such as a non-sliding window or wall mounted mirror. You can get coverage for replacement locks if the keys are stolen and for debris removal after a storm. There are variations between companies on items such as spoiled food (some will, some won’t), credit card theft from the home, even funeral expenses, up to generally $5000, as the direct result of a disaster.
Again, using a well known company to illustrate the point, we found that the NRMA will cover damage to a house structure caused by animals NOT kept at the site and cover contents. If you keep cats, dogs or any other animal and they are on site, then any damage caused by them is not covered. Sand, gravel and similar materials are not covered but material such as bricks and metal would be covered. Again, a natural disaster such as an earthquake is covered and if it causes an explosion, the damage caused by this will be covered, as long as evidence of the explosion is visible.
You can expect all companies to have differences in the detail of their policies. It may be a bit of a nightmare for you reading through the fine print but worth the effort in the event of a disaster taking place. If your home is in a flood plain you will need to be particularly careful to get acquainted with the detail of your current – or any future – home insurance policy, especially if you renovate.
