The federal government is looking into whether home loan providers should be made responsible for the lack of flood insurance held by many of the Queensland flood victims.
The investigation, is currently being conducted by the federal government’s natural disaster insurance review. Its brief is to assess to what extent lenders contributed to the inadequate insurance coverage by not insisting that borrower insurance for flood was sufficient to rebuild in the even of flooding.
The review’s chairman, John Trowbridge, said lenders generally did not insist that flood insurance was present and in sufficient levels for home loans and business loans they provided. While a certificate of currency is always requested, the details behind what the insurance covers were not looked at closely by lenders.
Going forward, the government will require insurers to provide a plain English standard definition of floods and other disasters in insurance contracts.