Will your insurance cover flooding?

Heavy rainfall and catastrophic floods have caused havoc in South Africa over the past year. Last year’s flooding and mudslides in KZN resulted in an estimated R25 billion worth of damages - and the death of more than 300 people. 

Extreme weather events present significant risks, and it’s important to be insured accordingly. This article examines the types of insurance you may need, and how to ensure that you are covered adequately.

Tip: Home insurance can protect your most valuable asset against extreme weather events. Find out more here.

The need for insurance

Extreme weather events have caused significant social and financial losses in South Africa. Insurance claims following last year’s floods in KZN amounted to well over R4 billion, says John Melville, chief underwriting officer at Santam.

Further, Melville notes, in February this year, severe flooding caused by heavy rainfall led to a state of disaster being declared in seven of South Africa’s nine provinces.

Despite this, many South Africans remain underinsured, and therefore unprepared for the financial losses incurred by flooding and other extreme weather events.

Insuring your assets

Two types of insurance can protect your property in the event of a flood. Building insurance (also called homeowner’s insurance) covers structural damage to your home due to floods or fires, and damage from a burst geyser or pipe. Contents insurance covers damage to the possessions in your home.

Michelle Norton, an independent short-term broker at Stepp Insurance Brokers, recommends taking out both of these, to ensure adequate coverage of your property.

When building insurance may not cover you

Although building insurance automatically covers events such as fire, storms, and flooding, insurers expect homeowners to maintain their properties for preventative purposes.

“Your policy will have a ‘reasonable precautions’ or ‘reasonable care’ clause,” Norton notes. “This means you’re required to take reasonable steps to prevent any damage or loss to your property”.

For example, if leaking pipes flood your home, it is your responsibility to get a plumber in to prevent further damage.

“There may be painful consequences if you don’t attend to the upkeep of your property. Further, insurers may add an endorsement to your policy that states that unless you repair or upgrade as necessary, future damage may not be covered.”

Circumstances under which you may not be covered, include, among others:

• Defective design. For example, gutters that don’t direct water away from your home’s foundations.
• Defective workmanship. For example, a poorly built retaining wall.
• Negligence. Examples would include failure to clear blocked gutters and drains, or ignoring rising damp.
• Lack of building plans. Damage to buildings is difficult to evaluate in the absence of layout designs. This often applies to older buildings.

“During last year’s KZN floods, homes that were built decades ago had retaining walls that gave way,” Norton explains. “It was impossible to provide an engineer’s report, as these houses did not have detailed blueprints.

“Although some insurers may examine a case on its merits, some insurers may reject such claims.”

Get your property assessed

It pays to work with a reputable, certified home inspector to identify possible problem areas.

Although banks are meant to inspect properties when granting home loans, many focus on valuations and don’t conduct the necessary inspections, says Norton.

Roofs are typical problem areas, and slate roofs in particular. These are often in poor condition as they are costly to fix.

Insulation is another problem area, says Eric Bell, CEO of Inspect-A-Home Group Southern Africa.

“Homeowners are inclined to take shortcuts to insulate their roofs, such as using black plastic refuse bags, but these disintegrate within a few months,” he notes.

Melville adds that professional assessments are particularly necessary in higher-risk areas.

“It’s vital to conduct expert risk assessments where properties are especially exposed to perils such as floods and fires,” he says. “Based on these assessments, an insurer may require that you take action to improve the resilience of your property in case of catastrophe.”

Although there’s little a homeowner can do in the event of a flash- or severe flood, it’s possible to minimise the damage with a sound drainage system, for example, which can direct water away from your home.

The average cost to inspect a three-bedroom house is R3,000 to R4,000 -  but this could save you many thousands of rands, says Bell.

“An inspection includes a professional report, not just a checklist,” he adds.

Tips for existing property owners

Hollard spokesperson Warwick Bloom offers the further following tips to ensure your home is protected against adverse weather events.

• Use your access bond to upgrade your property. This will allow you to make repairs or alterations to reduce the risk of damage.
• Review your cover. It’s important to ensure that your home’s insured value is sufficient. “During the KZN floods, many homeowners lost walls and swimming pools as well as buildings,” says Bloom. “Make sure permanent structures such as outbuildings, Wendy houses, paths and driveways, patios, tennis courts, swimming pools, walls, gates, and fences are covered.
• Check your policy terms and conditions. Review policy wording to ensure your cover is comprehensive. Most policies will cover the reasonable costs of temporary emergency measures to protect or prevent further loss or damage to a home.
  “In addition, most policies offer alternative accommodation if your home becomes uninhabitable after a flood, provided you have a valid claim,” Bloom says. “Some policies even extend cover to live-in domestic employees and family pets, so be sure you understand the extent of your cover.”
• Understand your premiums. You may be required to pay higher insurance premiums in areas where flooding is more prevalent, although insurers do try to strike a balance between once-off events and long-term trends, says Bloom.
  “Some areas may face a higher-than-average flooding risk, but relatively low theft risk. We consider all these factors when determining pricing,” he says.

Tips for new property owners

• Get your new home assessed. Bell says that estate agents are meant to disclose any defects, as noted in the Property Practitioners Bill. However, many simply compile an informal checklist with the seller, who often does not mention problem areas. “Budget for a proper inspection when purchasing a house,” he recommends. 
• Don’t buy a house based on aesthetics. “This can lead you to overlook what may cost you money later,” Bell warns.

Tips: Your vehicle should also be protected against flooding and extreme weather damage. Take out car insurance today.