Does Car Insurance Cover Flood Damage?

Insurance is a great thing. When the worst happens, the silver lining is that you get a nice shiny replacement for all the things you lost. Well, in the best case scenario at least… Insurance claims are, unfortunately, not always smooth sailing. The dreaded fine print can often put a dampener on a successful payout. And car insurance is no different.

Sure, if you have a minor collision, your insurance claim should be pretty straightforward. But what about when things get wet? Floods are fairly common here in Aotearoa, so are they covered by your car insurance policy?

Canstar takes a look.

Does car insurance cover flood damage?

Some car insurance policies will cover your vehicle for flood damage. But, not all. This could be due to your choice of car policy or, simply, your choice of insurer.

Third-party and third-party fire and theft

If you have third-party car insurance, it won’t cover you for flood damage. Third-party policies aren’t designed to cover damage to your vehicle. But rather to cover the costs should you hit someone else’s. So not only are you not covered for flood damage, but you’re not covered for much more than the repair bill of the car you hit.

If you have a third-party fire and theft policy, it may include cover for natural disasters. This depends on the insurer. Some fire and theft policies include added cover or add-ons and optional extras. Cover for natural disasters may be a part of this. But, even if natural disasters are included in your fire and theft policy, natural disasters may not actually include flooding (we’ll get to that soon).

Comprehensive car insurance

If you have a comprehensive car policy, you are covered for sudden and accidental loss/damage to your vehicle. This covers you for most scenarios. So long as it’s nothing out of the ordinary (think terrorism or war) or any serious fault on your part (drink-driving or drag racing, for example). So, if you have comprehensive car insurance, you should be covered for flood damage.

But, like anything, it’s circumstantial. If your car is safely parked in your driveway, then floodwaters submerge it, you’ll probably be covered. Additionally, if the banks of a river burst and wash away your car from a riverside parking lot, you’ll probably be covered, too.

But, car insurance policies have an exclusion for intentional or reckless behaviour. So, if you try to drive across town through standing floodwater, for example, and your vehicle gets stuck, that could be considered reckless. If your insurer believes it is, you won’t be covered.

→Related article: What Does Car Insurance Not Cover?

Are floods a natural disaster?

The obvious answer here is yes. Most of us would consider flooding due to heavy rains and storms a natural disaster. After all, the flood is the result of nature. And if it causes serious damage, that’s pretty disastrous.

But insurance policies don’t always agree. For example, State insurance provides cover for natural disasters under its third-party fire and theft policy. But, it also states that natural disasters include “an earthquake, natural landslip, volcanic eruption, hydrothermal activity, tsunami or natural disaster fire, as defined in the Earthquake Commission Act”.

Floods are noticeably missing from the list. Although it does include tsunamis, so you may be in luck if your car is inundated by a wave caused by an earthquake!

This is when it pays to read the fine print, or to speak to your insurer. While most comprehensive policies provide full cover, including for flood damage, any natural disaster-specific policies or add-ons, or any fire and theft policies, may not.

What about general water damage?

Your own doing

If you have third-party or third-party fire and theft, you’re out of luck. These policies are designed to help you avoid hefty payouts when you hit someone else’s car. And while some fire and theft policies include a few extras, any instance of flooding (outside of natural disasters) is not covered.

For those with a comprehensive car insurance policy, it may be a different story. But, it’s not likely. As mentioned above, car insurance policies exclude cover for intentional or reckless damage. And many instances of accidental flood damage are caused by negligence. Think windows left down while going through a car wash, or driving on a beach and getting stuck in a rising tide. In these cases, insurance is unlikely to foot the bill.

In a case which you were deemed not reckless and your car suffered significant accidental or sudden damage, you would, in principle, be covered. But if you have a particular scenario in mind, it probably pays to talk with your insurer.

Gradual damage

Car insurance policies don’t cover you for gradual damage or wear and tear. Unlike your house insurance, which usually provides some (limited) cover for a rusty pipe that leaks and rots the living room walls. But then again, cars don’t have rusty water pipes running through them…

They do, however, have certain water lines or hoses, that can wear with age. Unfortunately, if this wear leads to any significant water damage, you’re out of luck. It would be seen as gradual damage or general wear and tear.

Furthermore, if the seals around doors and windows age and no longer keep out the rain, don’t expect any payouts. Again, this is a result of gradual wear and isn’t covered under your car insurance policy.

Find the right car insurance policy for you

While all policies share many of the same exemptions, what is covered by your insurance can vary greatly. Not only between policy types but between policy providers, too. Flood damage is only the tip of the iceberg.

When looking for the right car insurance policy, you need to weigh up the costs, the level of cover, and what your car is worth. And when comparing car insurers, think about customer service, benefits and ease of claim.

It’s a lot to consider. Thankfully, Canstar can help take out some of the stress. We compare car insurance providers for you, to help make the decision a little easier, for more info, just hit the button below.

About the author of this page

This report was written by Canstar Content Producer, Andrew Broadley. Andrew is an experienced writer with a wide range of industry experience. Starting out, he cut his teeth working as a writer for print and online magazines, and he has worked in both journalism and editorial roles. His content has covered lifestyle and culture, marketing and, more recently, finance for Canstar.