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| Goodna at the height of the January 2011 flood, with the Goodna Railway Station at middle left. |
WOULD you be prepared to pay $6000 or more per year in home and contents insurance premiums to ensure your family was covered against all possible flood events?
What about an extra $2000 in home and contents insurance premiums even though your home is perched on top of a large hill?
In addition to Catherine Holmes's Queensland Floods Commission of Inquiry, which reported on Friday, the Commonwealth Government and the insurance industry were grappling with how to provide insurance cover for people who need it most.
Assistant Treasurer and Minister for Financial Services Bill Shorten said last year: "So much confusion and further heartache has occurred during the long clean-up and recovery period following the devastation (the floods of 2011). Confusion and heartache brought about by the difficulty people face in understanding their insurance contracts, and the devastating realisation for some people that, despite the word 'flood' being in an insurance contract, no cover is offered for a house that has been inundated with water."
Mostly the reason for that lack of coverage is that it is very expensive.
Estimated premiums for flood cover for homes assessed as at extreme risk of flooding are as high as $6777 a year, on top of standard home and contents premiums, according to data from the Insurance Council of Australia. High-risk properties pay an extra $1443 and medium-risk areas face $572 a year.
Katherine Lane, a solicitor with the Insurance Law Service, a national service for consumers said: "Working people can't afford that kind of money. And the last thing the Government and consumers need is for the people at the highest risk of flood to have the least insurance cover against flood."
The insurance companies want taxpayers to foot the bill for those massive premiums for flood insurance.
Rob Whelan, chief executive officer of the ICA said: "Direct, short-term government subsidies are the best mechanism to address flood insurance affordability issues."
The ICA is proposing that homeowners in flood-prone areas would receive thousands of dollars each year to help them pay their home and contents insurance premiums.
The ICA believes the massive cost of the scheme would create an incentive for governments to build better mitigation infrastructure to protect homes against floods. Ms Lane said that idea was unlikely to eventuate.
Another cause of confusion and heartache is how insurers assess flood risks.
"The problem is that some insurers work off flood maps, which can be very inaccurate," Ms Lane said.
Queensland's flood maps seem to be the most inaccurate of any state.
The ICA can only supply flood mapping data for 60 to 70 per cent of Queensland homes, mostly around Brisbane and the Gold Coast.
The Federal Government is addressing these problems. A common definition of flood across all insurers has been decided. One-page facts sheets will give customers an easy-to-read summary of key information in the policy.
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