Home News Apartment Owners Should Consider Catastrophe Cover

Apartment Owners Should Consider Catastrophe Cover

by Nina Smith

Did you know that since the beginning of this Millenium, there were only three years without a major disaster in Australia, and none without a minor one? And almost every single one of those caused damage to at least one hundred houses. The mayor one, the infamous bushfires during 2019 and 2024, damaged more than ten thousand housing objects. Many homeowners of apartments wrongly think that there are no chances that any disaster can affect their homes.

These catastrophes can happen everywhere, no matter if someone lives in highly populated cities or isolated villages on the verge of a forest or desert. So, the people living in apartment blocks aren’t in any way more protected than the ones living in rural areas.

Scientists have noted that natural disasters are slowly increasing, the likes of floods, forest fires, earthquakes, volcanos, and hurricanes. Since there are many environmental problems connected with our way of life, nature becomes much more hostile towards us.  Natural disasters are catastrophic and very unpredictable, the two most important reasons that encourage property owners to consider catastrophe cover for their property. It helps in transferring the risks of devastating losses to the insurance companies. Thus, apartment owners should consider catastrophe cover on their properties.

The main problem when facing that kind of event is helplessness since there is no way to fight the forces of nature, and when it comes to saving lives, many forget about everything else, especially real estate. And the losses are enormous since these disasters bring only devastation and damage. It helps in transferring the risks of devastating losses to the insurance companies. Thus, apartment owners should consider catastrophe cover on their properties.

Catastrophe cover to be part of your shopping list

Source: infoplease.com

Just like standalone homes, apartment blocks are also affected by these natural disasters. Additionally, the Queensland strata communities go ahead to say that strata communities should have proper insurance cover together with an up-to-date valuation. Therefore, having an insurance cover should be part of your shopping list; this is all thanks to the 200 bushfires that we had to deal with, plus the new zombie cyclone threat that could be heading to Queensland.

A good insurance cover should be able to protect a policyholder from unpredictable natural disasters. Natural disasters are considered low probability but have a tremendous cost implication to your property when it hits. Thus, you might find catastrophe cover is excluded from most insurance policies. But if you notice it is included, it might only cover damage cost that they feel is reasonable, which is not enough to refund all the repair costs.

Standard insurance might not adequately cover catastrophic events

Source: wsj.com

The wild summer is slowly approaching, and this should spring most of the communities around into action to get a catastrophe insurance cover. However, it is crucial to analyze the policy you have or planning to get into before making any decisions. Simon Barnard, the president of Strata Community Association, states that not all insurance policies adequately cover catastrophic events like the bushfires we have witnessed or the cyclone expected to come in summer.

Simultaneously, insurance valuations of strata buildings could also be outdated, leading insurance companies to fall short of inadequate cover in natural disasters. It is of utmost importance to find out what additional insurance cover when it comes to disasters. Many thought they were fully covered, unaware that their insurance doesn’t cover all the damage caused by nature. To avoid these problems on top of all, anyone should look for answers to a few crucial questions.

First, will the insurance company cover all the losses like the furniture in an apartment or just the structural damage? To answer this question, an owner should carefully read all the terms of an agreement.

Second, is this area considered a high-risk area for any particular natural disaster? For example, Australia is not at a high risk of earthquakes. Coastal areas are prone to problems with wind, and Queensland with floods, and everyone is at high risk of fires.

Third, are there any exclusions when insurance takes care of any damage? This one you can also see in policy terms, but some of the exclusions can happen if there were some improper repairs.

Forth, if there is any limit when it comes to an insurance payout? Many companies set limits to payouts when it comes to large figures. You can see those limits in the contract.

Last but not least, will the insurance company include any value change of the property?

Source: watersource.awa.asn.au

This one is a bit tricky and needs some work. The value of any apartment changes over time due to all sorts of reasons.

The good news is; this risk can be mitigated in due time; this is by ensuring your building valuations are up to date. And as a property owner, take the extra time to properly discuss the value an additional cover would have for you with the corporate body committee. So before choosing a policy, be informed about everything because there should be no surprises if catastrophe struck. And these surprises are always unpleasant.

Climatic changes have increased the need for catastrophe cover

The weather changes we have been experiencing have increased the need for strata communities to look at natural disasters’ financial impact. The cyclone seasons have taken a physical and financial toll within the local strata community, but as a community, you need to keep investigating better ways you can bounce back from natural disasters. And the best possible way to protect the community from losses is insurance.

In Queensland, there are more than ten insurance companies that provide catastrophe cover, and you will notice the extra cover. It might feel costly, but as a strata community, it is important to take the necessary steps to protect your property, and if you are located in high-risk areas, then this is the perfect time to take action and ensure you discuss this with your body corporate committee. And today, in these uncertain times, we are all at high risk. No matter if we live in houses or apartments. After all, better safe than sorry. And when it comes to home, never take chances.