Thousands of victims of the floods in New South Wales and Queensland will be unable to claim on their insurance due to exclusions in policy fine print, the Financial Rights Law Centre says. What is covered by insurance policies varies wildly between insurers because definitions of events including flood, rainwater runoff and wind damage are not standard, the group said in a new report. “There are going to be a lot of people who think they’re covered,” Drew MacRae, a policy officer at FLRC, said. But many will find they are not covered because the fine print excludes particular types of damage, MacRae said. He said this even applied to flood damage, which was given a standard definition after floods in Queensland in 2011, when the Brisbane River broke its banks and inundated low-lying Brisbane suburbs as well as regional centres. One insurer, NRMA, has included rainwater runoff in its definition of flooding, the FLRC report said. Residents “may have opted out of flood but have coverage for storm or rain”, MacRae said. “But if you couldn’t afford flood insurance, you may not be covered for rainwater runoff,” he said. In its report, Standardising General Insurance Definitions, FLRC found 65% of the insurers it examined considered flood and storm to be separate events but the rest lumped them in together. Some insurers also included wind, hail, rain and cyclone under the definition of storm but others did not. One insurer, RACV, also allows itself to remove flooding, rainwater runoff and storm surge damage from a policy if it deems a property at risk of these events, FLRC said. The research found that more than 75% of policies excluded damage to retaining walls, 25% excluded damage to bridges and 62% excluded damage to driveways or gravel paths. The majority of insurers (62%) excluded damage from “actions of the sea”, such as tidal surges, with only one, Defence, explicitly including it in their policies. Three insurers – NRMA, RACV and SGIC – said they would only pay for soil movement damage if it happened immediately as a result of the storm or rainwater runoff. The Insurance Council of Australia said 107,844 claims have been lodged over the floods in NSW and south-east Queensland, estimated to be worth $1.62bn. MacRae said the lack of standardisation also affected fire policies – something people discovered after the 2019-2020 bushfires ripped through large swathes of eastern Victoria and southern NSW. “In the black summer, some people were covered and some were not,” he said. “It comes down to whether it was fire with a flame, was it a bushfire? Sometimes they don’t cover smoke damage, sometimes they don’t cover heat damage.” He said terms needed standardising so that policyholders could use the new Consumer Data Right (CDR), which allows consumers to share their data with providers. “The CDR is there to help people switch, to get better deals,” he said. “The lack of standardisation makes it very difficult to do that.” Sign up to receive an email with the top stories from Guardian Australia every morning He said the problem had been obvious for years. “The industry will say we need innovation and competition but what is the point of innovation that means people aren’t covered for basics? “It really is another way of reducing costs.” The government committed to standardising insurance on the recommendation of a Senate inquiry in 2017 and began a consultation process in 2018. But progress stalled because treasury was focused on the banking royal commission, which kicked off in 2018, and its recommendations, which commissioner Kenneth Hayne handed to government in February 2019. “They still have not gone back to the work of standardising the definitions,” MacRae said.