Tuesday, September 14, 2010


While the Victorian floods, or water events if you like government speak, have had serious consequences for some people it is nothing like what many in Christchurch, New Zealand have suffered from the earthquake.

Here in Victoria there is the usual problem with householders insurance with people thinking they should be able to make an insurance claim for their damaged property and insurers saying no, you are not covered.

It is a complex area, but the insured really needs to have flood specifically mentioned in their policy, which depending on the risk, may increase their premium significantly. To give you an idea of the complexity, is it rising flood water or a raging torrent pouring through your house? Two different events open to different interpretations.

I recall a previous flood in Victoria where our largest insurer paid out for flood damage to houses even though it was not obliged to. Bad move, a precedent set and expectations raised. Whether they will do so this time I am unsure.

Once again we can look across the ditch to New Zealand to see how to do it properly. NZ has the government owned Earth Quake Commission. From premiums paid by householders a percentage goes to the EQC to insure against:

volcanic eruption
hydrothermal activity
and land damaged by storm or flood.

The scheme is not perfect, but far preferable to the way too confusing and open to interpretation private insurance we in Australia must put up with.

Let us have a look at another area of insurance in New Zealand, personal injury. In Australia you will be covered by a private insurance company for received injuries if you are injured in a motor car accident or workplace. If you think an authority or private company is responsible, the best of luck to you in court. Even motor car and work place insurers battle fervently against personal injury claims.

Not so New Zealand where there is no fault government backed insurance to compensate you for any personal injury. Perhaps again not perfect but surely along the right lines.

Sadly, as in Victoria, New Zealand lacks in one area of car insurance. Here third party personal insurance is compulsory for all cars and is paid with your car registration. Not so, third party car damage, not here, nor in NZ. An uninsured driver can run into your car, cause significant damage and if they don't have money or an income, then it is your bad luck and you will have to claim on your own insurance. Even if they do have money, it is a long complex process to get money from the person who damaged your car.

I had a workmate who drove a beaten up old car and she ran into an expensive car and caused a lot of damage to both cars. After a couple of years, finally the authorities were ready to garnishee her wages as compensation. She left the workplace and the whole process would have to be restarted, that is if she had another job.

How this nonsense has managed to last for so long, I just don't know.

(corrections welcome)

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Democracy is all very well, but why give it to the people? - Audrey Forbes-Hamilton.