Otokonoko:

Read a579 below. He/she make the point, the title deeds are held by the bank to ensure the security of the banks asset (Your house).

I make a point that written in the loan agreement with the bank are clauses that compel the mortgagor to insure the property on behalf of the mortgagee (bank): here is a fundamental wrong! The only part of the asset affectively insured for the mortgagor is the capital gain component; that being the difference between the market value of the property and the value of the loan.

I maintain that the right to insure the capital gain component of the property at sale should be the arbitrary right of the property owner and not the forced mandate given by the mortgagee (bank) . This is a point conveniently avoided in the insurance debate.

The obligation to insure the banks asset by the mortgagor as it stands, forces the mortgagor into the tight corner of two options if the asset is lost to catastrophe: one is to continue the obligation to the loan repayments for years on a property that is rendered worthless by an extreme event or the second is to declare bankruptcy and face a seven year financial drought.

My argument maintains that if financial institutions were forced by government edict to insure their own assets, then it would be banks (primarily) forced to deal with properties in flood zones : It would be banks dealing with the slippery nature of the insurance industry and not the powerlessness of the individual under stress of the circumstances associated with total loss of their mortgaged asset.

Thanks for the clarification. Like I said, my understanding was quite limited. It's still limited, but a bit less so thanks to you and a597.

Ted another point is that consumers with limited time tend to request a home and contents insurance over the telephone [with their own same vehicle insurer].

Papers are despatched afterwards and few people read or check their policies.

It would be interesting to find out how the phone interviews were conducted in relation to the million dollar question 'Do you reside in a flood affected zone'? Also, the question itself, or 'Flood' term you raise in your thread, is the 'point' of the predicaments many QLD people have found themselves to be in currently.

Most people not having witnessed or lived through the 1974 floods would have stated 'no, its not a flood affected area' stating the truth as they know it.

Therefore, insurance companies may well face court dates in the near future commenced by their QLD customers who have paid their premiums, answered the phone questions truthfully and factually, as they have known their individual situations to be.

In the long run, I would advise insurance companies that it would be less expensive for them to pay at least half of the costs involved in restoration of their customers homes than face legal costs and the time involved attending court daily for years with claim disputes.