Owning investment property can be a smart financial move, providing a source of economic security and creating an alternative income stream. While this is a smart decision, it is also important to secure the right level of investment property insurance, especially with the El Nino weather phenomenon expected over summer.
El Nino occurs when the water temperature in the Pacific Ocean increases, bringing more extreme weather to the entire Australian continent. On top of warmer temperatures, El Nino also brings lower rainfall to large parts of the country. With this extreme weather comes a range of different challenges to property owners, specifically around the risk of bushfires.
In fact, bushfires in Australia cost between $80 and $100 million in an average year, according to the Australian Institute of Criminology. These costs are likely to be much higher in an El Nino year when the risk of fires is much higher.
The Australian Bureau of Meteorology also found that there is a 50 per cent chance of El Nino beginning in September this year, creating the conditions for a long, dry summer.
These latest predictions come on top of one of the warmest years ever recorded, with much of Australia experiencing a very mild winter as temperatures remain well above their long term averages. A recent study from the University of Cambridge found that El Nino results in a short-term drop in Australia’s economic activity.
With a majority of Western Australia experiencing an above average risk from bushfires, according to the Bushfire and National Hazards Cooperative Research Centre, these dangers are very real for property owners.
For those who own investment property in bushfire-prone areas, there is a very real need to get the right protections in place. Keeping your investment property free from overgrown bush and maintaining a wide perimeter around the dwelling will give some protection in a bushfire.
Owners should also take out investment property insurance, in order to protect the value that they have stored in their property. By taking out this cover, you can be sure that the risks posed by a hot El Nino year do not adversely affect your investment.
Protecting your investment doesn’t have to be difficult, and will save you a lot of trouble if this summer turns out to be another hot, dry year, thanks to the effects of El Nino.