Does home insurance cover water damage in Australia?

Three things decide an Australian water damage claim, and all three are public. The first is whether the cause is one of the events standard cover lists. The second is whether one of the exclusions reaches it. The third is whether the insurer is running to time, which is set by a Code with numbered paragraphs rather than by how insistent you are on the phone.

This page sets out all three. The eight pages under it go deeper on the ones that actually get argued about.

First: is yours a prescribed contract?

Almost everything below only applies to what the regulations call a prescribed contract. Insurance Contracts Regulations 2017 (Cth) reg 33(1) lists six classes of contract:

• home building insurance contracts
• home contents insurance contracts
• contracts that combine home building and home contents insurance
• contracts covering destruction of, or damage to, a strata title residence
• contracts covering the loss of the equipment, stock, inventory or premises of a small business
• contracts covering damage to the equipment, stock, inventory or premises of a small business

That carve-out matters more than its length suggests. If a broker arranged your policy as your agent, the fixed statutory meaning of flood may not be doing the work you assume it is, and the policy’s own definition governs instead. Most householders who bought direct or through a comparison site are inside the prescribed-contract regime; a lot of small business owners are not.

For a business, reg 33(1)(e) and (f) bring premises, stock, inventory and equipment inside — but only for a small business. Insurance Contracts Regulations 2017 (Cth) reg 35(1) sets the test at turnover under $1,000,000 in the last completed financial year and no more than 190 employee hours a week. The regulation’s own note says 190 hours is the equivalent of five employees each working a 38-hour week.

The fourteen events standard cover lists

Reg 19(1) is short and worth reading in full once. These are the events a prescribed home building contract is taken to cover, unless the insurer clearly informed you in writing that it does not:

Two of them carry almost every water claim in the country. Subparagraph (vi) is the burst pipe wording, and it is drafted extremely broadly — fixed apparatus, fixed tanks or fixed pipes used to hold or carry liquid of any kind takes in a flexible hose under a sink, a failed hot water unit, a split dishwasher inlet and an overflowing cistern. Subparagraph (xiv) puts storm, tempest, flood, the action of the sea, high water, tsunami, erosion, land slide and subsidence in one line, as nine separate events that policies routinely price and exclude separately.

The rest of the list is worth knowing because it explains the shape of the argument when a claim is declined. There is no catch-all “accidental damage” event in reg 19(1)(a); the only accidental damage named is breakage of fixed glass and fixed sanitary ware at reg 19(1)(b). Accidental damage cover, where a policy has it, is something the insurer added on top, not something the regulation put there.

And the exclusions that actually decide claims

This is the one. Most Australian water claims are not declined outright; they are cut back, and the seam they are cut along is reg 19(2)(b). The escape of the water is the insured event. The corroded elbow, the perished flexible hose, the 22-year-old hot water unit that finally gave up — those are wear and tear, and the insurer will usually pay to dry the house and decline to pay for the part. That is not an insurer being difficult; it is the regulation working exactly as drafted.

The 60-day rule catches people who never see it coming: holiday houses, investment properties between tenants, a home someone has died in and nobody has dealt with yet. A burst pipe in a house that has been empty for ten weeks is outside standard cover, because subparagraph (vi) is one of the events reg 19(2)(f) drops. The survivors are lightning, earthquake and the impact events at (vii) to (xiv).

The covered-and-not-covered page works through this scenario by scenario.

Once you lodge, the insurer is on a clock

The General Insurance Code of Practice is not legislation, but every general insurer that subscribes to it is bound by it and AFCA treats a breach as relevant. The version in force is the 2020 Code as updated in October 2023 — The Insurance Council’s own Code page states the current Code was last updated in October 2023 and that public consultation on a redrafted Code ran from 24 June to 21 July 2026. The redraft had not commenced when this page was written.

Three of these are worth memorising. General Insurance Code of Practice, paragraph 77: a decision inside 4 months of lodgement, and if the insurer misses it, it has to write to you about its complaints process. General Insurance Code of Practice, paragraph 78 stretches that to 12 months, but only in five listed situations — The longer limit, and it only applies in five listed situations: an extraordinary catastrophe, fraud or suspected fraud, you not responding to reasonable enquiries, communication difficulties beyond the insurer’s control, or you asking for a delay. And General Insurance Code of Practice, paragraph 82: you can ask for copies of the reports the insurer relied on, and it has 10 business days to give them to you. That last one is the most under-used right in the whole Code.

The catastrophe rule almost nobody knows

Read that again. If your claim came out of a declared catastrophe and was finalised quickly — inside a month of the event — you can ask for it to be reviewed for up to twelve months afterwards, even though you may have signed a release. The Code requires the insurer to tell you about this in writing when it finalises the claim. After a major flood, when assessments are being done fast and at volume, this is the provision that unwinds an assessment that missed the subfloor.

If it goes wrong

General Insurance Code of Practice, paragraph 147 gives the insurer 30 calendar days to decide an internal complaint. General Insurance Code of Practice, paragraph 154: you can go to the Australian Financial Complaints Authority at any time, and in any case once thirty days have passed. AFCA, how we resolve complaints — it is free to the consumer, because it is funded by the financial firms that are its members. General Insurance Code of Practice, paragraph 156: AFCA determinations bind the insurer in the way AFCA’s Rules set out. They do not bind you -- you can reject one and go to court.

AFCA can consider a complaint where the amount claimed does not exceed $1,263,000 (AFCA, monetary limits and compensation caps). The most a consumer can be claiming for and still be inside AFCA’s jurisdiction. AFCA’s Rules require the limits to be adjusted every three years by the higher of CPI and Male Total Average Weekly Earnings. The separate per-claim compensation cap was not read from AFCA’s own page and is therefore not published here.

The eight pages under this one

Common questions