Properties at risk of under-insurance
When it comes to managing an investment property or properties, there are a number of things you need to keep in mind. Whether you are trying to get the right tenants or keep on top of your obligations as a landlord, there are plenty of different areas which you must be aware of.
One of these is securing the right level of investment property insurance, which can cover your investment against natural disasters and accidental damage. But, while getting insurance might be an obvious solution to protect your property, many owners have failed to account for another threat – under-insurance.
Under-insurance refers to occasions when an owner has some insurance on their property, but not enough to cover the costs that would come from an accident or environmental damage. This gap means that property owners themselves will be responsible for any expenses not included under their cover.
This risk is widespread, with roughly 70 per cent of homes under-insured, according to the Insurance Council of Australia. This makes it more likely than not that your investment property does not have enough cover to protect you in an accident.
One of the key reasons for this is that many policies are not adjusted over time or do not take into account inflated rebuilding costs in the event of a disaster. If a large-scale disaster like a flood or bush fire struck your property, building skills and supplies will be in short demand for months afterward, elevating the cost of rebuilding.
Another risk, according to the Insurance Council of Australia, is that people may have not been able to compare policies across a number of providers. This sort of service can be provided by a broker, and can give you peace of mind that your cover is comprehensive enough to meet any dangers.
Under-insurance doesn’t have to be challenge for property owners, as long as you take the right steps to address the issue before it is too late.