RESORT NEWS - TIPS SERIES: TIPS FOR INSURANCE
The cost of disasters and the need for accurate insurance The recent and ongoing storm season, as well as the concurrent bushfire risks has brought to the forefront once more, the importance of accurate insurance coverage for businesses in the accommodation sector. “Heavy rain from 25 January caused major flooding in Northern Queensland, where the Daintree River at Daintree reached record levels. The heavy rain continued to fall, affecting areas around Townsville on 30 January. The Queensland State government declared a disaster situation for Townsville on 31 January. Evacuations were carried out in Giru (south east of Townsville) and warnings issued for residents in Alligator Creek, Nome and Julago. The Ross River Dam spillway gates were opened on 03 February and warnings were issued to residents down river. By 05 February, local media reported that over 1,000 people had evacuated and thousands of homes and businesses were flooded after 1.8
metres of rain had fallen in the Townsville area in seven days.” The catastrophic floods that hit Townsville recently have caught unawares hundreds of small business owners that were not aware that their business policies did not provide cover for flood damage automatically. While the floods in South East Queensland of January 2011 did bring insurers into line with the standard definition and application of flood cover on domestic home and contents insurance policies, this did not extend automatically to business insurance policies. Many small business owners are now finding out that their insurance policies did not cover flood as standard, or that in many instances flood cover was not available or far too expensive to purchase. “The Black Saturday bushfires were a series of bushfires that ignited or were burning across the Australian state of Victoria on and around Saturday, 7 February 2009 and were among Australia’s all-time worst bushfire disasters. The fires occurred during extreme bushfire-weather conditions and
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resulted in Australia’s highest ever loss of life from a bushfire. Around midday, as wind speeds were reaching their peak, an incorrectly-rigged SWER line was ripped down at Kilmore East. This sparked a bushfire that would become the deadliest and most intense firestorm ever experienced in Australia’s post-1788 history.” The 2009 Victorian Black Saturday bushfires destroyed over 2000 homes with an estimated 13 percent of all properties uninsured, and for
those properties that were insured 40 percent of the covers were estimated to be either inadequate or underinsured. For many the purchase of adequate insurance cover in rural Victoria at the time was simply not an option, low-income earners and households, combined with the prohibitive cost of insurance that included onerous government taxes and stamp duties, created a systemic issue that estimates put at nearly one billion dollars of uninsured losses.
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RESORT NEWS - MARCH 2019
RESORT NEWS - TIPS SERIES: TIPS FOR INSURANCE
In fact, for every natural disaster that has hit Australia between the years 2004 to 2011 it is estimated that uninsured losses for each one was in the vicinity of one billion dollars with an expected increase in the years since. These are troubling figures for those of us in the industry of protecting business assets through risk management and the offloading of risk to insurers, and even though a significant amount of information is supplied to all of our clients that would border on obsessive, many are still left needing to weigh the cost of insurance versus the risk of an event occurring. Due to this, it is our recommendation that insurance be just one part of an integrated disaster strategy. While insurance can be seen as a fix-all for risk, it is far
“Insurance should be just one part of an integrated disaster strategy more effective in combination with proactive governmental disaster preventative and mitigation works, sustainable infrastructure and individual comprehensive business risk management plans. Working with an insurance broker to identify and comprehensively insure for risks that could occur to your business is the next step. A good broker will understand your industry and will work with you to draft and tailor an insurance policy tailored to your
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business that will protect you from these identified risks. By working with a professional you ensure that if a disaster does occur it has been planned for and mitigated appropriately. And while we could talk about the dangers of not insuring and underinsuring for far longer than this article has room for, we highly recommend that if you do not know without a doubt what you are covered for, contact your insurance broker and ask the questions, they will be happy to help. If you have further time
on your hands, we would also recommend making the effort of reading through your insurance policy’s Product Disclosure Statement, specifically the ‘What you are covered for’ and ‘Exclusions’ sections. Don’t allow yourself to get caught out. In closing, insurance is used most effectively within a suite of other community and planning based activities, and in consultation with a qualified and knowledgeable intermediary, that will assist you in comprehensively planning for insurable disasters that may strike your business. We at EBM are more than happy to discuss your insurance needs, free of charge, at any time suitable to you whether you are a client of ours or not, please do not hesitate to contact us on 07 5555 6222 or christophert@ ebm.com.au to solve tomorrow’s problems today.
RESORT NEWS - MARCH 2019
RESORT NEWS - TIPS SERIES: TIPS FOR INSURANCE
nce: a r u s in d r lo d Lan
a t a r t s n i s r e n w o r o f s p i T Your body corporate fees include insurance so that covers you, right? Wrong. Here are some tips to help you protect your investment. Strata insurance provides general insurance cover for the strata building, shared or ‘common’ areas, common property and contents as well as liability in the common areas. The cover provided by the strata building policy often ends when you cross the threshold into of your individual property. It is important you look at the strata insurance policy purchased by your body corporate to understand what is and is not covered in your apartment so you can take out the appropriate landlords’ cover.
Understand your risks Becoming a landlord can be an exciting stage of life but landlords face a series of risks including: •
Accidental damage to contents you own like lighting, carpets, kitchen and electrical appliances
•
Malicious damage by tenants or even burglars
•
Damage from fire, floods and storms within your apartment
•
•
Loss of rent while the apartment is being repaired after a claim Legal liability for injury in your apartment
Landlord insurance is designed to cover your risks as an owner in strata.
There are savings in strata Some landlord insurance is designed for houses so you can end up paying for things you don’t need. A good way to spot this type of policy is wording like “Building insurance for landlords” your building is normally covered by strata insurance so you don’t need this. A better way is to have a landlord policy specially designed for strata from companies like CHU. A good landlord policy for strata will start where the strata insurance stops so you get value for money.
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Airbnb and shortterm rental cover This might sound obvious but short-term rental is growing in popularity. It is worth checking that it is covered by your landlord insurance.
CHU landlords’ insurance for strata policy covers the cost of accidental or malicious damage to your property, theft, the cost of repairing or replacing damaged contents such as furniture, furnishings, curtains,
You may not be planning for short term rental now but the rental market changes and it’s simpler to have it covered in your landlord insurance. Flexibility rules.
carpets and internal blinds.
Tenancy laws
sum insured is up to $30 million.
State tenancy laws tend to favour tenants. And there is no sign of that changing any time soon.
This product caters to a versatile
Sometimes we focus so much on laws that we forget that landlords can still have very positive results! Landlord insurance covers some of your risks.
and short-term rentals.
Why did you decide to be a landlord? It wasn’t because you wanted more headaches, was it? When you think that landlord insurance is really covering your financial results, it is so worth it. What is the value of peace of mind? Priceless.
Should you become legally responsible to pay compensation for personal injury or property damage, the
range of property owners including landlords of long term CHU Underwriting Agencies Pty Ltd (ABN 18 001 580 070, AFS Licence No: 243261) acts under a binding authority as agent of the insurer QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFS Licence No: 239545). Any advice in this article is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Before making a decision to purchase a product we recommend you consider whether it is appropriate for your circumstances and read the PDS. A copy of the CHU Landlords Insurance for Strata PDS can be obtained by contacting CHU on 1300 361 263 or visiting www.chu.com.au.
RESORT NEWS - MARCH 2019