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Flood claimants question 'like-for-like' replacements

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Victims of this year’s record-breaking floods are increasingly asking insurers to help make their properties more resilient as they rebuild – but policies usually specify like-for-like replacements.

The Insurance Council of Australia (ICA) says insureds are consistently asking about the issue at community forums. But it says insurers are “contractually obliged” to replace like with like.

ICA COO Kylie Macfarlane tells insurers may need to consider how products evolve in future.

“Is there the opportunity to think about different terms of contract that may allow customers to engage their policy terms in a way that allows them to remediate or rebuild their property outside of the traditional like-for-like terms?”

The major insurers say that while they do broadly follow the like-for-like principle, they also try to be flexible where there is an opportunity to improve a home’s resilience.

See Analysis.