Natural forces take their toll

1st June 2020

The plight of uninsured householders affected by the Australian bushfires is a reminder of the importance of buildings and contents cover, even if securing it can be more difficult or costly when your home is at greater risk from natural forces such as storm, fire or flood. One victim did have their misfortune balanced out by an A$1m (£530k) lottery win, but it is perhaps unwise to rely on such luck.

Clearly, the greatest tragedy of the bushfires has been human fatalities and the massive loss of wildlife. However, those who have escaped injury but lost their homes and possessions have often suffered trauma, as well as the prospect of rebuilding their finances, their homes and their lives. Insurance cover can be a financial lifeline when such a disaster strikes.

Underinsurance: a false economy

Uninsured and underinsured householders in Australia, as elsewhere, could end up regretting their false economy. In fire-ravaged New South Wales, a levy on insurers pays the bulk of emergency service costs and this adds about 25% to premiums, meaning more people there aren’t insured. Other states fund emergency services through a property tax, making insurance more affordable.

The moral of the story? Wherever you are in the world, don’t be tempted to save money by underinsuring your property. You might end up paying for it down the line.

It’ll never happen here…

Well, actually it could. While wildfires are relatively unusual in the rainy UK, February’s dreadful storms reminded us of risks related to that, they do occur. In April 2019, firefighters tackled moorland blazes in Greater Manchester and West Yorkshire. According to New Scientist, there were more UK wildfires last year than ever before, with fires in the Midlands, South West, Wales, Northern Ireland and the Scottish Highlands recorded by the National Fire Chiefs Council.