Brand EditorialEPMEPM: Best Practice & Legislation

Disaster season and landlord insurance: Sharon Fox-Slater

If the weather goes bad, will your landlords be prepared, asks Sharon Fox-Slater. 

Beaches, barbies, budgie-smugglers…and bushfires. The image of summertime in Australia may be one of sun-drenched beaches and swimming in warm water, carefree holidays and lazy days that culminate in spectacular sunsets, but sadly the reality does not always live up to that postcard image.

The summer months are when our nation often bears the brunt of Mother Nature’s wrath. The risk of cyclones, storms, floods and bushfires soars between November and April – often resulting in devastating damage bills.

The outlook for this year’s disaster season is sobering. The Bushfire & Natural Hazards Cooperative Research Centre predicts that large parts of southern Australia will face above-normal bushfire activity. For those in northern Australia, the Bureau of Meteorology notes there is a 56 per cent chance of an above-average number of cyclones this season. And just two months into summer there have already been bushfires, storms and cyclones brewing.

As a consequence, it’s a busy time for insurance claims. Last year the Insurance Council of Australia declared four catastrophes, totalling more than $2.2 billion in claims:

  1. Cyclone Debbie, 28 March: Insured losses of $1.613 billion from 73,556 claims
  2. NSW storms, 19 February: Insured losses of $512 million from 53,720 claims
  3. Victorian storms, 19 December: Losses estimated at $105 million from at least 25,000 claims
  4. NSW bushfires, 12-18 February: Losses of $33.5 million from 2,000 claims

In addition to the losses stemming from the declared catastrophes, many millions more in claims resulting from bad weather were made across the land.

From an insurance perspective, once a disaster has struck it is too late to arrange appropriate cover, so now is the time to check with your landlords that their investment property is protected should the weather wreak havoc.

As an agent it is important that you are aware of what covers the owner has, or doesn’t have, on the property as you will often be on the frontline when disaster strikes. Points to consider when discussing insurance cover:

  • Currency
    Is their policy up-to-date (not expired/lapsed)?
  • Level of cover
    Is the level of cover, including sum insured, sufficient?
  • Policy inclusions
    What risks (insured events) are covered under the policy? Some policies exclude flood cover, for example.
  • Policy exclusions
    What exclusions, limitations and excesses apply?
  • Policyholder obligations
    What are the policyholder’s obligations under their cover, such as loss mitigation or routine building maintenance/repairs?
  • Claims procedure
    What are the requirements when it comes to repairs, for example do all repairs including urgent ones need to be authorised by the insurer before the work is commissioned?
  • Type of policy
    Is the insurance on the property a standard building policy or a landlord policy that covers risks unique to investment properties including loss of rent, which can be invaluable if the property is damaged or destroyed and unable to be leased.

Agents who are appropriately authorised by an insurer can assist landlords in arranging cover or making policy changes to help limit the chance of them being hit by the fallout from extreme weather conditions this summer. Those not authorised might like to suggest their clients look into securing the right cover.

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