With bushfire season starting earlier, and lasting longer, property investors need to make sure their investments and incomes are better protected should disaster strike.
This comes as emergency services in New South Wales and Queensland battle intense fires burning out of control.
Now is a timely reminder for landlords and property managers to understand the risks associated with owning or managing investment properties in fire-prone areas. The early start of the official danger period indicates Australians are in for a longer than normal bushfire season, meaning properties are more at risk.
While bushfires can oftentimes come out of nowhere, and spread crazily, there are a few things landlords and property managers can do to reduce the risk of homes catching alight, including cleaning gutters of leaves and twigs and making sure the garden is kept in check.
Those who own or manage investment properties in fire-prone areas should also check they have adequate landlord insurance cover. While property owners need a defence, they also need a safety net – and that is where landlord insurance comes in.
If you own or manage a rental property, check you have adequate cover against natural disasters, including bushfires. While fire is covered under most household policies, there is sometimes an exclusion period, so if a bushfire occurs within a certain number of days of taking out a policy, cover for this feature is oftentimes void.
And, it is important you take time to make sure the property is insured for the correct amount.
Underinsurance is rife among Aussie property owners, with most homeowners insured for less than their home and contents would cost to replace. The Insurance Council of Australia estimates more than 40 per cent of households fail to correctly assess the value of their home and contents.
This means, if a property is to suffer a total loss (for example, if a home burns completely to the ground), the landlord would not be insured for the correct amount to rebuild the property and would ultimately be out of pocket.
Building costs and standards oftentimes change and the amount you insure your property for should be calculated on the rebuild costs, not of the original purchase price of the property.
It shouldn’t be a ‘set and forget’. Each year, you should check your insurance to make sure you are covered for the right amount and that you haven’t forgotten to factor in other expenses such as demolition and debris removal.
At EBM RentCover, we suggest landlords engage a quantity surveyor or builder to get an accurate estimate. Because, losing your home is tragic enough without the added pressure of financial hardship.
Cover for fire is an automatic inclusion in all EBM RentCover policies. However, when it comes to damage by bushfire, the policy has to be active for longer than 72 hours before it will respond to a related claim (this also extends to the increase of the sum insured - if you change the amount your property is insured for, the policy will again have to be active for longer than 72 hours before it will respond to the higher sum insured).
Now you know the importance of landlord insurance, knowing how to respond in times of disaster makes the claims process easier.
This is what to do if a home you own or manage is impacted by a bushfire:
- If safe to do so, do a safety walkthrough and take steps to prevent further loss or damage
- Contact your insurer as soon as you know your property is impacted so they can advise next steps
- Grab a notebook and camera and capture the damage
- Seek quotes for repairs
- Submit an insurance claim at the earliest opportunity
*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 954 374 if you have any questions.
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