State Insurance tells woman floods not included in 'natural disaster' cover for her car

Tuesday, 31 August 2021

Flood damage to Waimauku resident Paige Rust’s car is not covered by State’s third party, fire and theft policy.

Waimauku resident Paige Rust woke to find her car half-submerged in flood water, one of many victims of freak flooding in the Auckland region.

But insurer State Insurance said the third party, fire and theft policy it sold to cover Rust’s 2006 Nissan Wingroad only covered damage caused by natural disasters, and flood did not count as a natural disaster.

Rust, 18, said it was “very disappointing. This feels like a natural disaster, as it was nature that caused this”.

“I’m not sure how this isn’t a natural disaster. How else it would be defined? Everyone else that I have talked to, family, friends, count this as a natural disaster,” she said.

A number of properties in Auckland's Kumeū are under water after a storm. This video has no sound.

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The Auckland region was battered with heavy rains overnight on Monday, leaving many people with no choice but to break lockdown to flee to safety.

The Rust family, who live near the Kaipara River, awoke to find their driveway submerged.

Rust’s father, Glenn Rust, said he was angered by the State policy wording.

“When we rang the insurance company, they said because its third party, fire and theft, it covers her for natural disasters,” he said.

“But they are telling us a flood is not a natural disaster.”

Natural disaster cover is not included in many third party, fire and theft car insurance policies, such as this policy from Tower. But even where it is, natural disaster cover may not include flood damage.

“I just think that’s wrong. Here’s a kid who's done the right thing, and insured her fairly low-value car, and they are saying she’s not covered. It just seems wrong,” Rust said.

State's policy defines a natural disaster as: “an earthquake, natural landslip, volcanic eruption, hydrothermal activity, tsunami or natural disaster fire, as defined in the Earthquake Commission Act.”

That act’s definition includes storm or flooding only in the case of storm or flooding.

A State spokesman said in a statement that flooding was not covered by its third party, fire and theft policy.

State’s comprehensive car policy did cover flood damage.

Third party, fire and theft policies are often taken by younger drivers with less valuable cars to protect them in case they have accidents involving other motorists.

Other insurers like AA Insurance and Tower also exclude flood damage from third party, fire and theft policies, but those two insurers’ third party policies did not include any natural disaster cover.