The uninsurable house: flood, storm surge and insurance risk on the Queensland coast

Why this has become a real problem

Insurers now price flood risk at an individual address level rather than by postcode. Two houses in the same street can be quoted very differently because one sits 400mm lower. After a decade of major Queensland flood and cyclone events, reinsurance costs have flowed straight into household premiums, and the highest-risk properties in Australia now carry premiums measured in tens of thousands of dollars a year.

Storm surge and coastal inundation add a second layer on the Sunshine Coast. A property on the Pumicestone Passage side of Golden Beach, or a canal property, can face storm tide exposure that is separate from riverine flood and is treated differently by different insurers. Some policies exclude actions of the sea entirely.

The result is not usually a flat refusal. It is a premium so high that the property no longer works financially, or a policy with a flood exclusion that a lender will not accept.

Why it kills the finance, not just the budget

Lenders require the security property to be insured for full replacement value, with the lender noted, from the date of settlement. If a buyer cannot obtain acceptable cover, finance approval will not be issued or will be withdrawn.

That has two consequences. If the contract is still subject to finance, the buyer may be able to terminate — provided the finance condition is properly worded and notice is given on time. If the contract is unconditional, the buyer is exposed to a default they did not cause and cannot cure, and the deposit is at risk along with damages.

The other timing trap is risk. Under the standard REIQ contract, the property is at the buyer's risk from 5pm on the first business day after the contract date. A buyer who cannot insure is carrying the risk of a house they cannot cover from that moment.

What a buyer should check before signing

Almost all of this can be done in a day or two, and it is far cheaper than a failed contract.

• Get an indicative insurance quote for the actual address before you sign, not after. Give the insurer the address and the year of construction and ask specifically about flood, storm surge and actions of the sea.
• Check the council flood mapping and any flood or coastal hazard overlay applying to the lot. Sunshine Coast Council and Moreton Bay both publish property-level flood information.
• Ask for the floor level relative to the defined flood level. A house built 800mm above the flood level and a house built at it are different insurance propositions.
• Search the property's claims history where possible. Insurers will price on prior claims at that address even where the current owner did not make them.
• For units, check the body corporate's insurance and the last renewal notice. A scheme in a surge zone may have a very high excess or an exclusion, and special levies follow.
• For older Caloundra and Golden Beach stock, check whether the dwelling could even be rebuilt to current standards on that lot after a total loss.

Contract protection that actually works

The standard contract has no insurance condition. If insurability matters to your purchase, it has to be added as a special condition before you sign.

• An insurance condition: the contract is subject to the buyer obtaining, within a stated number of business days, building insurance including flood cover at a premium not exceeding a stated amount, failing which the buyer may terminate and the deposit is refunded.
• A properly drafted finance condition with realistic timing, so an insurance-driven finance refusal is covered by a clean termination right.
• Where the buyer takes the risk knowingly, a price adjustment reflecting the capitalised cost of the premium — an extra $8,000 a year is not a nuisance, it is a material reduction in what the property is worth.
• For a due diligence purchase, a due diligence condition wide enough to cover insurance searches, not just building and pest.

What sellers and agents need to know

Since 1 August 2025 the seller disclosure regime requires a statement and prescribed certificates before the buyer signs. Flood risk is not neatly captured by a single disclosure item, and that gap is where disputes will arise.

The safer approach for a seller is transparency. A seller who provides their current insurance certificate of currency and the council flood information up front removes the buyer's best argument later and generally holds a better price than a seller whose buyer discovers the premium at week three and renegotiates from a position of grievance.

Agents should not answer insurance questions from experience or from what the last buyer was quoted. Premiums are address and insurer specific, and a confident wrong answer about flooding is exactly the kind of statement that becomes a misleading conduct claim.

How we help

We review contracts before signing at no charge, and insurance exposure is one of the first things we look at on a low-lying or canal-front property. That review is where the special condition gets added — afterwards, it is too late.

• Pre-signing contract review with flood and coastal hazard overlays checked against the lot.
• Insurance and finance special conditions drafted to work together, so an insurance refusal produces a clean exit rather than an argument.
• Advice on risk passing and interim insurance between contract and settlement.
• For sellers, a disclosure pack prepared so a buyer's insurance enquiries do not become a late price renegotiation.

Flood, storm surge and uninsurable houses — common questions