Is your insurance ready for a natural disaster?

With Australia’s bushfires providing a devastating start to 2020, the impacts and ramifications of natural disasters serve as a reminder how prone many parts of Australia are to events like bushfires, floods and cyclones. 

These events impact the lives of local people in many ways, not least through the tragic loss of life and property, as well as the long-term effect on livelihoods. Areas that persistently experience destructive natural events, like Northern Australia, have been the source of unique challenges for insurers and business owners alike. 

Counting the cost of cyclone, flood and fire 

The insurance industry is all too aware of the real cost of natural disasters, with Australia’s 2019-20 bushfire season incurring an insurance cost of $2.4 billion. 

The estimated insurance losses of South-East Queensland’s 2019 hailstorm are $451 million, while the East Coast storms and floods earlier this year are projected to cost $896 million. 

Understand your cover 

When it comes to evaluating a policy as a consumer, you first need to identify the natural events that your home or business may be subject to, such as flooding, bushfires or cyclones. 

If flood cover is included, what constitutes a flood event under the policy wording? A home may be covered for a house fire, but does the policy specifically cover a bushfire event? Does the wording require actual damage to be caused by the fire or are the effects of heat covered as well? 

Getting into the fine detail of the wording is crucial as most policies include cover for “storm,” “rainwater” and “run-off,” but the exact definition of these terms depends on your policy wording. Even if a policy excludes flood damage, you may still be covered if the damage was due to the storm or rainwater. 

Some insurers exclude flood cover while others treat it as an optional extra at an additional cost. There is also a trend for flood cover as a standard inclusion. 

Insurance policy checklist 

Before purchasing cover, you should look to clarify: 

• What amount and events are covered 
• What limits or waiting periods apply 
• Any policy wording with your broker/advisor 
• That you are not under-insured and review your sum insured regularly 

The bottom line is that you should check the definitions in your insurance contract, specifically the Policy Schedule and PDS. As your broker/advisor, we can help answer your questions and (if necessary) translate your policy into everyday English. It pays to ensure you’re covered for any eventuality, so contact us today.