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NRMA blunder highlights insurance menace

Erasing a mistake

A major oversight by one of Australia’s largest insurers demonstrates just how important it is to read the fine print on your insurance policy.

In mid-2016, the town of Picton on the outskirts of Sydney was devastated by a major storm, causing extensive flood damage in the town’s centre and nearby homes.

Locals told My Business that one of the businesses affected was the local branch of NRMA Insurance, which found itself not covered because of a disputable clause around what constitutes flood damage versus storm damage.


The NRMA did not respond to repeated requests for comment on the matter.

The Insurance Council of Australia has previously outlined the definition of flood damage for insurance purposes, but many business owners are still being caught out on this and other fine print clauses in their policies.Erasing a mistake

Risk management consultant Rick Stone of Tigertail told My Business that while insurance is a valuable part of protecting your business from natural disasters and other incidents, it is important to fully understand the fine print before taking out a policy.

“The thing about insurance is it will cover only what you buy, so you need to be really careful and really clear about what you are insuring and what the coverage is,” he says.

“The insurance company is there to make money … the same as the rest of us are, and we need to be aware of that: they are not a charity.

“I don’t know about you, but I’ve never seen an insurance company that’s operating from a tin shed out of the back of a cheap block of land somewhere.”



According to Rick, your best approach is to focus on prevention for everything you can, and insure yourself against factors beyond your control.

“If you cannot control it in any other way, it’s important to have the appropriate level of insurance cover.

“You really need to speak to specialist brokers about that, because it is a complex area.”

Adam Zuchetti

Adam Zuchetti

Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016. 

The two-time Publish Awards finalist has an extensive journalistic career across business, property and finance, including a four-year stint in the UK. Email Adam at This email address is being protected from spambots. You need JavaScript enabled to view it.

NRMA blunder highlights insurance menace
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