How to help future-proof your home from Australia’s extreme weather

With parts of the country still reeling from record floods, which followed one of the most catastrophic fire seasons in memory, many Australians are concerned about the increasing risk of losing their homes.

The Insurance Council of Australia found that Australians carry a five times greater risk of displacement due to a natural disaster than someone living in Europe, while an earlier report by ASIC noted that almost 9 out of 10 Australian homeowners were underinsured – meaning if their homes were destroyed, their insurance wouldn’t cover the full cost of the rebuild.

Michelle Rolfe, a home insurance specialist and wealth coach with ANZ, says we seem to be having ‘once in a century’ weather events on an annual basis with people across Australia affected. And there’s little doubt that this is due to increasing climate change.

“It’s not just isolated to regional areas — the recent floods impacted many metro areas across Queensland and NSW,” Rolfe says.

So, if recent weather events have you concerned about the potential loss of a home – and the cost to rebuild it – we’ve asked Rolfe the top things to keep in mind.

The cost of rebuilding your home will depend on a variety of factors you may not have considered.

The importance of building insurance

For many Australians, underinsurance is leaving them hundreds of thousands of dollars out of pocket. The impact of that can reverberate through your future.

“It can mean people are permanently displaced from their homes,” Rolfe explains. “They may need to make difficult decisions such as to relocate, downsize or rent. And the rebuild cost shortfall could significantly impact their savings and retirement plans.”

Family circumstances change over time and building costs increase. If we don’t review our insurance policies annually, they won’t be aligned with the real cost of rebuilding a home.

Second-guessing the cost of rebuilding your home risks being caught out when building costs rise over the life of your policy.

“Most of us aren’t building valuation experts such as a quantity surveyor, and building costs have skyrocketed in recent years,” Rolfe says. “A fixed ‘sum insured’ policy (which most home insurance policyholders have in Australia) may not take into account variable costs, such as price increases on building materials, supply and demand impacts on prices, or changes in building code requirements.”

In fact, a Master Builder Association’s report found that building material costs are increasing at the fastest pace in 30 years. Reinforced steel saw the biggest increase of 43.5% within a year, this means that the average home-builder is seeing the price per square metre jump significantly.

So, what do you need to know about insurance to ensure you’re not caught short?

3 tips for peace of mind when shopping around for insurance:

1. Compare products & consider full building replacement cover

Don’t wait for claim time to find out the true value of your cover. Use a comparison site like finder.com.au or canstar.com.au to compare products. If maximum peace of mind is important, choose a full building replacement solution. Full building replacement takes the hassle out of calculating your own building sum insured, as it offers protection for the costs involved in rebuilding your current home (to the same size and standard), if it’s damaged or destroyed by an event covered by the policy.

ANZ has been recognised by Finder as the only brand to include full building replacement as a standard feature across all home and landlord building insurance products, helping to remove the risk of building underinsurance.

2. Review the replacement cost of your home annually

It’s important to review the total cost for a rebuild of your home every year.

If the cost of premiums is the most important factor for you right now, and you choose a ‘sum insured’ policy, review the total cost for a rebuild of your home every year. Look for hidden expenses like the removal of debris, temporary accommodation for your family, including pets (ideally for at least six months), professional fees, supply and demand costs and the costs of meeting building code requirements. 

3. Help ensure your contents are properly covered

Reputable insurers deliver comprehensive cover of your building and belongings. It’s not worth saving a few dollars a week in premiums only to lose hundreds of thousands of dollars with an underinsured home. It’s standard for ANZ Home Insurance to cover storms, floods, water damage (including burst pipes), accidental glass breakage and more. Read the fine print to check you’re covered for the full range of eventualities.  

Remember, the cost of replacing your home this year will look different from the cost of replacing the same house in five, ten or fifteen years. Not all insurance products are created equal.

And with the increasing frequency and intensity of extreme weather events, protecting your most valuable asset has never been more important. 

Visit ANZ Home Insurance to learn more about the value of full building replacement cover today.

Things you should know:
ANZ Home Insurance is issued by QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239 545) (QBE) and distributed by ANZ under its own licence. ANZ recommends that you read the ANZ Financial Services Guide (PDF 179kB)ANZ Home Building Key Facts Sheet (PDF 130kB)ANZ Home Contents Key Facts Sheet (PDF 130kB)ANZ Home Insurance Target Market Determination (PDF 199kB) and the ANZ Home Insurance Product Disclosure Statement (PDF 548kB) (available by calling 13 16 14), before deciding whether to acquire, or to continue to hold, these products. Any advice provided is general only and has been prepared without taking into account your objectives, financial situation or needs and may not be right for you.

The post How to help future-proof your home from Australia’s extreme weather appeared first on realestate.com.au.

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How to help future-proof your home from Australia’s extreme weather

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