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Homeowners are doing all they can to protect property, something experts recommend highly given a mass insurance shortfall in the country. Picture: Steve Pohlner.
A leading property expert says cyclone Alfred has exposed an Aussie practice swept under the carpet for years, which could have devastating impact nation-wide.
MCG Quantity Surveyors director and leading Australian property insurance expert, Marty Sadlier, warned homeowners were exposed to a dire financial crisis if they sustained damage by Cyclone Alfred due to many under-insuring their homes to cut costs for years – a practice that occurs nationwide.
“Based on current information, there’s no doubt in my mind Queensland and New South Wales property owners are in for devastating insurance challenges once the full force of Alfred has passed.”
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Cyclone prep along the esplanades at Margate & Redcliffe for businesses, cafes and houses ahead of Cyclone Alfred. Picture: Steve Pohlner
“There’s been an epidemic of extreme under insurance across Australia,” he said.
Analysis of over 2000 insurance assessments by MCG last year across multiple property sectors found most were underinsured by 24 per cent, he said.
“Most properties simply don’t have enough coverage to adequately ensure they can be properly repaired or replaced after a crisis event like this.”
“Residential property alone is underinsured by 18 per cent on average. So, if a home’s true insurance value was $650,000, which is reasonably common, its owner would be up for around $117,000 to cover the shortfall in replacing their destroyed property.”
He said there would be far-reaching consequences of the underinsurance epidemic.
“It’s apparent few understand the monumental impact this can have on not just property owners but consumers and the economy as well. In extreme cases, the result has been businesses that are essential to some communities being closed permanently.”
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Michael Vuleta 73yrs of Scarborough north of Brisbane ready for what’s to come. Picture: Steve Pohlner
Mr Sadlier said the insurance crisis hitting the country had been “fermenting for some years now, yet it’s only when events such as this cyclone hit that the consequences come into sharp focus”.
“Cost-of-living pressures compelled some owners to ‘discount’ their premiums via underinsurance or even choose to cancel expensive insurance coverage altogether which will obviously prove to be a financially devastating decision.”
“A combination of factors has brought us to this point, such as fast-rising construction costs, unreliable automated insurance calculators and a lack of available labour.”
“Perhaps the most concerning reason is the extraordinary increase in insurance premiums. Put simply, people and businesses can’t afford adequate cover … that’s why some have chosen not to insure because the cost is so high.”
He said ABS data from two years ago indicated 23 per cent of Australians had no property insurance at all.
“I’d suggest the number is even greater now.”
STEPS TO TAKE IF YOU ARE UNDERINSURED:
“It’s impossible to get new coverage or update your policy now that the cyclone is bearing down, but there are some things property owners can do to ease the fallout,” Mr Sadlier said.
1. Follow government advice to prepare your property to minimise damage.
2. Take your current home and other property insurance policy out of the filing cabinet and keep it with you, along with other important documents.
3. Read the policy and see what you are covered for.
4. After the event: Comprehensively document your damage and losses.
– Take photos and videos.
– Make notes, date and timestamp them.
– Contact your insurer as soon as possible to get your claim underway.
5. Later: Commission a comprehensive and accurate insurance estimate for your property from a qualified professional.
“Don’t rely on estimates from an unqualified operator or, even worse, online insurance calculators as they’re notoriously inaccurate,” he said.
