Bushfires, Floods, and Insurance
The recent bushfires around Australia have had a devastating impact on many, with hundreds of homes and many lives lost. Now the fires may be out, but the impacts continue even for those not directly affected, and many people are now asking themselves “what if it happened to me?”
We asked our Caféstudy research community about how the bushfires have changed their view on insurance, and how they expect insurance companies to deal with large natural disasters.
What we learned
For many, home insurance is a ‘must-have’. But while most people understand the importance of having insurance cover to rebuild or repair their homes in the event of an accident or natural disaster, the bushfires have prompted many to re-assess their insurance.
Regardless of remote possibilities, recent events have made me look at my policies.
Most of the people who participated in our research are sure that they are covered against damage caused by fire and flood. The ‘close to home’ nature of the recent fires means that even those who usually stay on top of their insurance needs are thinking about their coverage again.
In some cases there are thoughts that perhaps their insurance is not adequate. This reflects the many stories of underinsurance that have featured in the media recently.
I have home insurance, but I am now wondering if I am fully covered for fire and floods. I am pretty sure I am covered for fires but not floods. Also wondering if I have under insured.
Every time there is some disaster or other, there are significant numbers of victims who find that their insurance falls well short of expectations.
One of the biggest concerns is that the losses faced by insurance companies will be used as an opportunity to increase premiums, even for those who are not in bushfire affected areas.
The premiums will definitely rise. Insurance companies don’t like to lose money and these disasters are going to cost them a fortune. Unfortunately, all of us are going to pay for it with higher rates.
They will increase quite a lot for most of us as the companies will want to claw back their losses. So all of us will have to take a hit to the hip pocket.
What does this mean for insurance companies?
Home and contents insurers can expect to be placed under more scrutiny by their customers and will need to ensure their premiums remain fair and competitive. Even more crucially, it is clear that people need support and assistance from their insurers to understand exactly what they are covered for and how much insurance they need.