Home owners across the country say hefty increases on their home insurance premiums have come as a "rude shock" because they don't live on flood-prone properties.
Premiums calculated on postcodes alone are being called "inequitable" by home owners who live kilometres from flood-risk zones but are still required to pay a higher cost.
Maryborough on Queensland's Fraser Coast was impacted by two floods at the beginning of 2022, but resident John Thomas said his apartment complex was never at risk.
The town's postcode is 4650, and while many homes in the region were impacted by flooding, others were not.
According to local council flood mapping, the block of 26 units on Alice Street is not in a flood hazard area but would be impacted in an event above 13 metres — the highest flood level ever recorded in the town, in 1893.
But Mr Thomas said his building insurance, issued by Strata Community Insurance for Allianz, had still risen by more than 50 per cent — from $14,800 to more than $22,500.
"We sought quotes from a number of insurance companies and took the cheapest one, the highest was $30,000," Mr Thomas said.
"It's become fairly obvious to people that Maryborough is classified as a flood zone, and the insurance companies seem to do that simply off 4650."
He said the units, largely occupied by pensioners, were managed by a body corporate which was legally required to take out insurance.
"We do feel a little bit hogtied," he said.
"You're completely at their mercy and it's completely unwarranted in places like this."
'I made a strategic decision'
Liz Peers owns a home in Kurrajong at the base of the Blue Mountains.
The council area of Hawkesbury was impacted by flooding of the Hawkesbury River this year, but her home is kilometres away from the flood-risk area.
"If there were floods in Kurrajong, most of Australia apart from Mount Kosciusko would go under," Ms Peers said.
Despite this, the cost of her insurance with Budget Direct had increased by almost 40 per cent, a figure she described as "ridiculous" and a "rude shock".
"I called the insurance people and was told that's because of the flood," she said.
"I'm categorised as Hawkesbury and [the assessment] went on the first three digits of my postcode."
A self-funded retiree, she said she was forced to cut out contents coverage to make the premium affordable and ended up paying $840 this year, up from $600 the year before.
"I was extremely angry that it went on postcode, when I made a strategic decision when I bought this block that it wasn't in a flood or fire zone," she said.
Mr Thomas and Ms Peers have called for more transparency from insurance companies.
Other insurers imposed region-wide embargoes during flood events.
Linda Dempsey relocated from Queensland to Kooringal, a suburb in Wagga Wagga, in southern NSW, in October.
When she tried to change the address of her car cover with Coles Insurance, she says was told she was "uninsurable", even though her property was not at risk of the riverine flooding that was impacting Wagga Wagga at the time.
"Obviously they're working from a remote office somewhere and don't have any idea what's going on," Ms Dempsey said.
"They said, sorry that's our rules — at the moment you're in a flood-prone area and we're not going to insure you."
A spokesperson for Coles Insurance said an embargo was placed on Wagga Wagga for a month from October this year but had since been lifted.
It said embargoes during natural disaster events were standard practice.
Risk complicated by recent disasters
CEO of the National Insurance Council Andrew Hall said some insurers did calculate premiums using postcodes, while others assessed individual properties.
He said assessing flood risk had become complicated, due to the increase in record-breaking flood events this year.
"In places like Lismore, the maximum probable flood level was 10 metres — it went to 14.5. And in Eugowra, it was underestimated by at least 1.5 metres," he said.
Mr Hall said home and contents insurance in Australia made a loss of $250 million in the past 12 months, and the focus needed to be on reducing risk, not cheaper insurance.
"It's often people who live in the area that don't [face perils] … that are going to end up paying the price for everyone else," he said.
Budget Direct and the Allianz group did not respond to requests for comment.
