Australia has suffered through an extraordinary bushfire season with almost 5 million hectares of land burned in New South Wales alone.
Many areas across the country continue to battle the elements as fire scorches natural habitats and threatens to destroy hundreds of homes in its path. In places where fire hasn’t reached, smoke haze lingers as a stark reminder.
69 fires contiune to burn in NSW with 20 to be contained. Firefighters have worked tirelessly to slow the spread of fire and build containment lines ahead of increased fire dangers. Hot and windy conditions are expected to return to many parts of NSW this week. #nswrfs #nswfires pic.twitter.com/cSZL0dL73K
— NSW RFS (@NSWRFS) January 19, 2020
The 2019-20 bushfire season offers a timely reminder of the importance of having proper home insurance. Authorities in New South Wales estimate that more than 1,500 homes have been destroyed by fire, so it’s vital that you have the proper insurance to protect your investment property.
Are you properly insured?
In 2018, the Banking Royal Commission’s probe into the insurance sector brought to light widespread misconduct and breaches of the Insurance Code of Practice.
One issue that was raised was underinsurance, where policyholders were led to believe that their policies covered the full replacement of their properties but discovered their cover fell short when they made a claim. For property investors, this means facing considerable losses and risking financial hardship in the case of a natural disaster like a bushfire.
More recently, an Insurance Council of Australia report found that a staggering 70 percent of Australians use their own judgement as the basis for an insurance valuation. This is an alarming statistic, given landlords could lose thousands if they have insufficient cover.
Types of insurance to consider
As a landlord, it’s essential to have an understanding of investment property insurance including building and contents.
Building insurance covers the cost of repairing damage to the structure of your property, particularly in the event of a fire, storm or flood. While contents insurance covers for damage to, or loss of, personal possessions in the home. Of those with contents insurance who purchased a new high value asset in the past five years, more than half did not update their contents policy after making the purchase. In fact, a startling 23 per cent of homeowners said the highest value item in their home wasn’t covered. This leaves investors exposed in the event of natural disaster, especially given there may be thousands of dollars of claimable depreciable value left in destroyed assets. It’s important to contact a specialist Quantity Surveyor if assets are damaged as a site inspection may be required.
Loss of rent cover is another option designed to cover your financial loss after damage to your property prevents it being tenanted. This damage may be caused by floods, fires, and any others indicated in the policy’s product disclosure statement. This cover may also apply where property access is prevented by damage to surrounding properties.
With 77 per cent of homeowners exposed to significant financial loss, it’s more important than ever to review, renew or arrange proper home insurance for your investment property.
As an insurance broker, BMT Insurance has access to construction cost data to provide a guide on estimated replacement costs on your property. This guide can help you to find the most cost effective insurance to meet your needs.
For more information, contact the expert team at BMT Insurance or call 1300 268 467 today.
Related articles: