December 2011 edition of Insurable Interest, we reported on the
passing of the Insurance Contracts Amendment Bill 2011
which provided for the implementation of a standard definition of
flood, and the requirement that insurers provide a Key Facts Sheet
with home insurance policies.
To this end, on 19 June 2012 the Insurance Contracts
Regulations 1985 were amended to prescribe a standard
definition of flood for certain insurance contracts. Insurance
contracts affected by the amendments cover home buildings and
contents, damage to strata title residences (such as apartments),
and loss of equipment, stock, inventory or premises of a small
business. However, if the insurance contract was arranged by an
insurance broker, who did so in the course of providing financial
advice, the prescribed definition will not apply.
Flood is defined as:
"the covering of normally dry land by water that has
escaped or been released from the normal confines of any of the
a lake (whether or not it has been altered or
a river (whether or not it has been altered or
a creek (whether or not it has been altered or
another natural watercourse (whether or not it has been
altered or modified);
The meaning of canals and modified natural watercourses will
include infrastructure such as irrigation canals and drainage
systems that have been constructed using natural contour lines or
existing watercourses. However, stormwater systems such as street
gutters and underground sewage systems are not considered to be
canals or modified natural watercourses under the definition.
This definition is to apply to every contract of insurance
(described above) even if the policy wording says otherwise.
However, if a contract provides cover in respect of loss caused to
a business and the insurer proposes giving flood a different
definition, it must take 'reasonable steps' to ascertain
that the business is not a 'small business'. Such steps
will require the insurer to consider all relevant information
obtained from the insured when the contract is entered into.
The amendments will come into force on 19 June 2014 to allow
insurers sufficient time to update relevant documents and implement
the necessary changes.
standard definition of flood set out in the Insurance Contracts
Regulations 1985 will come into force on 19 June 2014 and will
apply to certain insurance contracts, regardless of the written
terms of those contracts.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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