Why home insurance in flood areas is more expensive
In recent days in Australia, floods and fire disasters reminded how important home insurance is. However, home insurance prices in some parts of the country are quite high.
Flood disaster in Townsville, Australia, caused hundreds of houses to be damaged. Many experts emphasized the importance of home insurance. However, home insurance prices from different regions of the country differ.
“The physical barriers to prevent or reduce the impact of flood and that is one of the reasons flood prone communities do have high insurance premiums compared with communities that have in place mitigation such as flood levies or other forms of barriers,” said Insurance Council of Australia’s Campbell Fuller.
Fuller gave the example of a flood disaster in Queensland four years ago. He added: “The cost to insurers was astronomical, especially compared with premiums that insurers had been receiving. Roma Council, in collaboration with state and federal government, embarked on a levy and on the completion of that levy, the most vulnerable properties in Roma saw an 80 per cent reduction in the cost of their insurance because the risk had been reduced to such an extent.”
According to Fuller “If you are buying a property in a flood prone area and you want flood cover, you need to look for an insurer that offers flood cover in that region. Each insurers policy is different and not all insurers will cover a landlord for flood damage, so the investor needs to shop around or talk to an insurance broker and seek the most appropriate product for their needs, bearing in mind that the cheapest may not actually be the most appropriate for their needs.”
Sharon Fox-Slater, managing director of RentCover has announced that good insurance can protect you from major losses.
Sharon Fox-Slater said although there was a floodway at the base of the hill, the drainage couldn’t cope with the volume of water during heavy rain.
She explained the floodway overflowed and the investment property located behind the hill bore the brunt of the mud, silt and water flowing through the house. The wall linings (up to about one metre), flooring, skirtings, doors etc. were all damaged.
She added not only was the policyholder able to claim for the repairs, the $41,000 payout included loss of rent. And it is cover for rental losses that is one of the major differences between a standard home and contents policy and a specialist landlord policy.
Sevdenur Demir / email@example.com