Small businesses in Townsville flooded by a burst water main in March are frustrated after the city council's insurer refused to cover their losses. Six businesses were inundated with black water when a pipe burst on University Drive, including Cassandra Jones' barber shop, where she lost antiques and furniture.
Mayor Jenny Hill initially told media the council's insurance would 'look after' affected businesses. However, Local Government Mutual (LGM) Queensland, the council's insurer, has sent letters stating it does not believe the council would be found liable. Jones said her insurer covered about $92,500, but she is out of pocket by at least $250,000, including legal fees, and is considering litigation.
Other business owners face uncovered costs. Carmel Gage, who owns a quilting shop, said her insurer covered most damage but she hoped the council would pay about $20,000 for loss of trade and moving costs. 'We were out of business for 10 days,' she said. 'To me it just sounds a little bit ridiculous especially when the mayor said that the council's insurance would pay.' Scott Murray, who owns an archery supply shop, estimated he deserved at least $15,000 after being forced to relocate for two weeks.
Councillor Hill said she was initially 'under the impression' the insurance would cover businesses but an independent assessment found the council was not negligent. 'So I think this will now become a battle between the insurers of the businesses with the council's insurer,' she said. In a letter, Jardine Lloyd Thompson (JLT), which manages LGM schemes, argued the council acted reasonably and cited the Water Supply (Safety and Reliability) Act, which protects service providers from liability if they acted without negligence.
Business owners questioned the council's response. Some said water flowed for hours and crews struggled to find the line. A council spokesman said crews responded before 7am and provided clean-up support, adding that the council spends millions annually on pipeline maintenance. The letter asked businesses to withdraw claims or provide further reasoning on liability.
