Insurers Will the Break Law If They Don’t Pay Flood Victims

Added by Elivia DeVries on February 19, 2011

Insurance companies that will not pay homeowners who have been hit by the flood will break their insurance contracts, thus breach the law, according to the Australian Lawyers Alliance (ALA). According to the group, insurers must respect contracts with their clients and provide the coverage implied by the Insurance Contract Acts (ICA).

According to Adam Tayler, the ALA Queensland president, the prescribed coverage implied by the ICA includes floods. According to Tayler, insurers that did not warn and notify homeowners with who they signed insurance contracts that the respective policy did not include flood coverage must pay.

The ALA president further added that the definition of “flood” does not mean only storm or riverine flooding, thus, if an insurance company cannot prove that it advised, prior to the contract being signed, that it didn’t cover floods, then it cannot withdraw from paying.

Adam Tayler also stated that members of the group he leads have been reporting that their clients received standard short letters, though which they were notified that they didn’t have coverage where insured homeowners thought they did. ALA’s Queensland presided said the insurers’ behaviour must be stopped since it’s “reprehensible”.

ALA members have supported legal clinics in Queensland areas affected by flooding. Mr Tyler said that they will continue to do so, in order to help people exercise their legal rights implied by the contracts they signed with insurance companies.