Insurance against the ravages of nature

May 25th, 2020

Nature can be especially cruel to the uninsured homeowner. In Australia, it is estimated that more than 2,000 homes were destroyed by last summer’s bushfires. In the UK, storms Ciara and Dennis have flooded over 1,200 homes. Fire and flood damage to your home is a heart-breaking prospect at any time – but even more so if you are uninsured. As more homes get built in ‘at risk’ areas, the more likely it is that insurers will be reluctant to insure them, though the ‘Flood Re’ scheme was created to assist householders where possible.

Clearly, the greatest tragedy of natural disasters is the loss of human and animal life. However, those who have escaped injury but lost their homes and possessions have often suffered trauma, as well as the prospect of rebuilding their finances, their homes and their lives. Insurance cover can be a financial lifeline when such a disaster strikes.

UNDERINSURANCE: A FALSE ECONOMY

Uninsured and underinsured householders could end up regretting their false economy. In fire-ravaged New South Wales, a levy on insurers pays the bulk of emergency service costs and this adds about 25% to premiums, meaning more people there aren’t insured. Other states fund emergency services through a property tax, making insurance more affordable. In the UK, research shows that as many as six million homes have no form of insurance. The moral of the story? Wherever you are in the world, don’t be tempted to save money by underinsuring your property. You might end up paying for it down the line.

DISASTERS HAPPEN

Statistics show that one in six UK properties are located where there is a serious risk of flooding. The threat of UK wildfires should not be discounted either. According to New Scientist, there were more UK wildfires last year than ever before, with fires recorded in the Midlands, South West, Wales, Northern Ireland and the Scottish Highlands.