Insurance Law and the Impact of the Newcastle/Hunter Region Storms

Breaking News indicates that the number of storm claims received on the Central Coast/Newcastle and other regions has exceeded 20,000 and is climbing. As with all major catastrophes this presents only part of the picture as there are both insured and uninsured losses. Insurance market statistics indicate that whilst there is substantial underinsurance the home buildings percentage more than doubles when it comes to contents. On top of this most businesses normally only insure for material damage losses and the application of excesses or deductibles can be of assistance to insurers mitigating losses. Although the business market is fairly well insured when it comes to property the same cannot be said with respect to business interruption or consequential loss insurance. Anecdotally the vast majority of businesses do not have business interruption insurance and some commentators have said that up to 95% of all businesses have not availed themselves of this type of insurance protection. It is commonly said by insureds that they do not need it, they do not understand it, it is too expensive and it is unlikely that they will need to claim on it. Unfortunately with every disaster many businesses fail because they failed to safeguard their income, revenue or turnover. Businesses cannot survive with cashflow.

Although underinsurance or the lack of insurance is a major problem for the community in both good and bad times its importance is critical in times of natural disasters including storms and cyclones. Every time there is a major storm either general or localised flooding is a problem. It becomes a problem for a number of reasons, the major one being that flood cover is not normally available on both personal and business lines products. Where it is, the extent of it is normally circumscribed by limiting it to either 5% or 10% of the sum insured or alternatively by only providing for flash flood with a policy limit perhaps $5,000 or $10,000 depending upon the particular insurer involved. In times of natural disasters insurers do the very best they can to try and protect their policy base but like all other businesses they are accountable to their shareholders. What this really means is, that in most major storm scenarios, insurers will take the point as to whether the damage caused was a direct result of storm and tempest or alternatively is due to flood. One of the reasons why they have to do this is because they have never received a risk weighted flood premium as normally all that is covered is storm and tempest and/or rainwater. As a result many policy holders affected by these events deny that their claim was caused by flood and was purely and simply the direct result of rainwater penetration. Interestingly, there is a different test applied for damage to buildings as against damage to contents for personal lines insurance.

Although some commentators have indicated that some insurers will pay flood claims not all will and it can be expected that this will be a hotly contested issue in some quarters. As with all major past storm events and/or catastrophes a number of arguments often arise, one being that there was genuine storm damage caused prior to the time flood took effect and as a result they are entitled to claim for this proportion of the loss. This argument has validity in some cases and given the nature and extent of the damage caused by the current disaster, it can be expected to be relied upon by any number of policyholders. Obviously, insurers are in the business of trying to pay claims but sometimes are unable to do so, because after all the relationship between the parties is largely dependent upon the policy which has been issued. Often times, claims are denied following major storm events or catastrophes as the exact circumstances of what occurred is not properly understood by the insurer as resources are often stretched to breaking point and it is inevitable that this will result. Where insureds encounter these difficulties irrespective of the nature of the insurance affected, whether a brokered or non brokered risk, they should seek the services of a competent legal adviser to ensure that their rights are properly protected. Obviously something maybe overlooked by insurers when confronted by the magnitude of the tasks which they are forced to assume when catastrophes occur and often they are prepared to entertain claims which are properly presented to them where circumstances indicate they may have been in error.

There is no doubt that insurers seek to rely upon their own internal disputes resolution processes and the insurance ombudsman service to try and deal with disappointed policyholders. The problem with this is not the process or whether it may or may not be subjective or objective but rather that the information which is held by the insurer leads them to a view this claim should be denied as it does not fit within the scope of the policy cover because it is expressly excluded. Our view is that whenever this happens to you, you should try and do the best you can but if you are not being listened to and the damage is substantial then you should consider your options, one of these should be to obtain proper legal advice from an insurance lawyer who fully understands your predicament irrespective of the type of claim and knows how to address the issues. Should anyone have a different view about any of these matters your comments would be appreciated?

Comments

[FreeSpeech]

Hi My name is Reny

I have been through the whole process including the Ombudsman who is meant to be independent in its determinations.

My insurer NRMA has done all they can to send me to the wall financially, my insurer has even lied to the FOS (Ombudsman) and supplied falsified documents all of which I can prove. The FOS has refused to look at my claims and re-rule on my claim based on the fact the NRMA supplied false documents.

My insurer has forced a cash settlement upon me, well knowing I can never make claim to these funds due to my credit provider. My claim was only worth some $10,000 to the home and pool, but for some reason unknown the NRMA and their builder made repairs to the pool a priority over the home leaving the home to take in every rainfall that followed the June 2007 storms. On top of this these repairs all failed within 5 months, these repairs also allowed more rains to enter the home were they screwed the solar absorber onto the roof allowing the structure of the home to rot away.

My insurer told me they were no longer using their builder who carried out the repairs, I have learnt recently this again was another lie as they are still to this very day using this builder. And still the NRMA refused to take responsibility for the failed repairs and denied any liability.

It appears that the NRMA can continue these practices of lies and deceit and not one of the governing authorities can do anything about it.

I tried to seek legal advise from dozens of solicitors all knowing that I have been sent to the cleaners bat the hands of my insurer, all of which state my claim has merit but they require from $10,000 to $30,000 up front. I am loosing my home as a result after which I will be declaring bankrupt.

My loan has acquired over $17,000 in interest and penalties over the last 4 months, How does one fight a system when only the insurer has the protection. My home stands totally destroyed, I lost all my contents to the tune of some $70,000 plus which has been replaced by the NRMA, I have lost all photo’s of my children growing up and other items that could never be replaced all because the NRMA refused to make the home a priority over the pool repairs. What course of action do we have.

I have set up a website at www.mynrma.info that has my story and I have invited others to publish their stories on my site all have similar experiences to mine. With the aid of my site and others in my position I intend to lobby to have the laws changed that govern insurers like the NRMA and put their own greed above the customers needs. I am open to advise if you can help.

[Business Insurance]

Thanks for the great content and information. I am always browsing the internet looking for good content to get ideas for my easy home based business blogs and articles. You have some real good content here so just keep on doing what you are doing as good stuff like this is always hard to find.