Excess on an Australian water damage claim

The word is excess. Not deductible. That is not pedantry: it is the fastest way to tell whether a cost guide you are reading was written for Australia or copied from somewhere else, and if the vocabulary is imported the dollar figures usually are too.

One event, more than one excess

The thing people are not told, and find out at settlement, is that the excess is per claim and a single water event can produce several claims.

Three arrangements, three outcomes:

• Combined building and contents, water confined to your home. One policy, one claim, one excess. This is what everyone assumes.
• Building and contents insured separately. Two policies, two claims, two excesses, and two independent sets of Code timeframes running at different speeds. Common with investment properties, and common where a landlord insures the building and a tenant insures their own contents.
• Strata. The owners corporation insures the building; you insure what is inside the lot. Water crossing between common property and a lot almost always produces a claim on each. Two excesses, two assessors, and two organisations each reasonably certain the other one should be paying.

The flood excess

Many Australian policies carry a separate flood excess, and in higher-risk areas it can be several thousand dollars against a standard excess in the hundreds. That is a direct, quantifiable consequence of which provision applies to your water, which is why what flood legally means is not an academic question. Water that came across the ground from a surcharged stormwater drain is not flood under reg 34(1), and if it attracts a flood excess anyway, that is worth challenging in writing on day one rather than at settlement.

Whether claiming is worth it at all

This is the arithmetic nobody does, because nobody publishes the numbers that would let them. Here it is.

A small escape of water — one room, carpet and underlay, caught the same day — is, on the published rates this site reproduces, a job of roughly $1,260 excluding GST for the drying alone: call-out, an hour of extraction, two carpet dryers and a dehumidifier for the published three-day minimum. If your excess is in that neighbourhood, claiming buys you very little and starts a claims-history entry you keep for years.

A four-day dry across two rooms is about $1,913, and most of a house for a week with HEPA filtration is about $8,885 — before anything is replaced and before anyone puts the building back. At that end, the excess is noise.

The cost page has the calculator, and it shows every line it added so you can check the arithmetic against the published rate card.

What a cash settlement changes

A cash settlement is the insurer paying you a figure instead of managing the work. It can be the right answer — you control the trades, you control the timing, and you are not waiting on a builder somebody else appointed. It can also be how a claim quietly becomes your problem.

Two provisions to use. The first is paragraph 79 above: you are entitled to material explaining how cash settlements work and how the figure was decided. The second is General Insurance Code of Practice, paragraph 61 — where a home building claim needs a scope of works, the insurer must give you information to help you understand it. A cash figure without a scope behind it is a number you cannot check.

And the one nobody mentions: Insurance Contracts Act 1984 (Cth) s 57; Insurance Contracts Regulations 2017 (Cth) reg 38. Reg 38 sets the rate by formula off the 10-year Bond yield. It is not something you have to ask for as a favour.

If the insurer appoints the repairer

Where the insurer selected and directly authorised the repairer, two Code paragraphs work in your favour and most people never invoke them.

That second one is worth reading twice. If insurer-appointed work has to be redone and that leaves you needing accommodation or a hire car beyond what the policy would otherwise give you, the insurer arranges it and pays the reasonable cost. It is not a favour and it is not discretionary.

Common questions