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Byron Shire
May 23, 2022

Flood insurance rejected? It’s not too late for a challenge

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Aslan Shand

Did your insurance claim from Cyclone Debbie get rejected? If it did then you are in the same boat as the local business Sanctum in Billinudgel, and you too might still be able to challenge the insurance rejection.

Following Cyclone Debbie ‘Many small business owners, such as myself, were left with extensive damage to our businesses,’ said Sanctum founder Greg Milham.

Like many local businesses and residents his insurance claims were quickly rejected by his insurer Vero.

‘The first thing the insurer says is “it’s flood damage – you’re not covered”,’ continued Greg.

‘The insurance company were relying upon a report from a hydrologist to suggest that my factories were flooded. We knew the report was incorrect owing to the topography of the area, direction of the water flow and the fact the water left in our factories was clear.’

Rejected three times

Nonetheless the claim was rejected three times by the insurer, who produced multiple hydrology reports to back themselves up. By their third hydrology report stating that the damage was caused by flood it became clear that ‘their third report disagreed with their first report’.

With the assistance of Lachlan Main from Main Lawyers and the Office of NSW Small Business Commissioner (OSBC) Greg was able to challenge the insurer’s claims. Greg joined a bulk submission to the Financial Ombudsman’s Service (FOS) from small-business owners from the region that has expedited the process of determining flood claims.

Decision binding

The decision of the FOS is binding on the insurer who is then required to pay the insurance claim if it is found to be valid.

‘In approximately five months, the FOS received our multiple submissions, three hydrological reports from the insurer (attempting to justify mistaken conclusions in the earlier reports) and personally attended our premises for a site inspection,’ said Greg.

‘Their expeditiousness, professionalism and commonsense approach to our situation was a breath of fresh air particularly when insurance companies are involved.’

The FOS determined that Sanctum’s main factory was damaged by stormwater run-off and not floodwaters; however, there were other areas of the damage that were not covered under the insurance claim.

‘Many of the (hydrology) reports I have seen that have been used to reject claims are open to challenge,’ said Sanctum’s lawyer, Lachlan Main.

‘Insurance companies are not always right and don’t accept their decision if you have doubts.

‘The event at the end of March 2017 was very different from a typical flood event. The levels of rainfall were extreme. If your insurance claim has been rejected, consider making an application to FOS. If you are unsure of whether you have a reasonable case, seek legal advice. Many law firms, such as mine, will provide an initial consultation free.’

The FOS can assist residents and businesses in relation to insurance-related complaints on 1800 367 287.

‘There are a range of insurance-related issues that have been raised with the OSBC following Cyclone Debbie including concerns about the rejection of claims, slow response and the quality and consistency of expert reports,’ said a Department of Industry spokesperson.

Greg highlighted that the majority of the hydrology reports produced by WRM in Lismore, Billinudgel and Murwillumbah were all very similar.

‘Anyone who has been beaten over the head by the WRM should seek advice. If it hadn’t been for Lachlan Main and Robyn Hobbs (NSW Small Business Commissioner) I would have given up,’ finished Greg.


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