CGU has become the first major insurer since the Government responses to the Natural Disaster Insurance Review were released in November to provide automatic flood cover in home, contents and landlords policies.
Automatic flood cover is one of a range of benefits CGU Insurance announced in early December to give increased coverage and peace of mind to its customers. From February 2012, CGU’s home, contents and landlords policies will automatically include cover for flood on renewal, ensuring its customers are fully covered in the event of storm or flood water damage to their home. This will also speed up the claims process by removing the need for complex assessments.
"Our customers and intermediaries have told us that automatically including flood cover in our policies will remove ambiguity when a property is damaged by storm or flood water and give them increased certainty and peace of mind," said Peter Harmer, CEO, CGU Insurance.
CGU has been able to introduce flood cover due to recently improved access to flood mapping data from local councils and state governments and a commitment from Federal Government to developing a central, consistent source of flood mapping data. CGU will calculate flood cover premiums according to the unique property address and based on the possibility of each individual property flooding and the severity of damage.
This development was greeted enthusiastically by Government, who released draft regulations to introduce a standard definition of "flood" for insurance contracts of home building and home contents (combined and individual policies); small business; and strata title insurance policies shortly after CGU’s announcement.
Then-Assistant Treasurer Bill Shorten, said: "The Government welcomes the announcement by CGU that it will be extending flood insurance coverage. This will be based on the new definition to be included in the Regulations and demonstrates the positive impact that is already being seen as a result of the Government's policies.
"I call on other insurers to match CGU's improved customer service on a range of fronts, including flood coverage, payment frequency and dispute resolution."The draft regulations include the proposed wording of "flood" to be used in these insurance contracts as follows:
Flood means the covering of normally dry land by water that has escaped or been released from the normal confines of:
The proposed definition is consistent with the recommendation of the Natural Disaster Insurance Review, that the Government introduce a standard definition of 'flood'.
"People are entitled to know exactly what is, and what is not, covered under their insurance policies. This is a pretty straightforward proposition, but inconsistent definitions of what constitutes a 'flood' created confusion and heartache for many people after the flooding in eastern Australia earlier this year," Mr Shorten said.
"The release of these draft regulations is an important step in ensuring consumers can make informed decisions about the level of flood cover they need."
The Government is seeking comments on the definition of "flood" proposed in the regulations along with other aspects, including the definition of 'strata title residence' and the test to determine whether a business is a small business for these purposes. The draft regulations can be read here. The deadline for submissions is 3 February 2012.
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