Disaster season: Is your investment property prepared?

The outlook for this year’s disaster season is sobering. The Bushfire & Natural Hazards Cooperative Research Centre predicts that large parts of southern Australia will face above-normal bushfire activity. For those in northern Australia, the Bureau of Meteorology notes that there is a 56 per cent chance of an above-average number of cyclones this season.

Now is the time to check that your investment property is protected should Mother Nature unleash her wrath.

From an insurance perspective, once a disaster has struck it is too late to arrange appropriate cover, making early risk mitigation a must:

• Check the policy is up-to-date. It is easy for policies to lapse and leave you at risk.
• Ensure that the level of cover (including sum insured) is sufficient. Underinsurance is rife in Australia and it’s only at claim time that many people realise their oversight.

• Check that the risks will be covered under the policy. Many policies exclude flood cover, for example.
• Understand the policy – the inclusions and what exclusions, limitations and excesses apply. Not all policies are created equal – or cover the same things – so it’s important that it specifically includes the eventualities (insured events) that you need cover for.
• Understand your obligations under cover, such as the loss mitigation clauses. This is important for you and your agent to understand before the property is damaged, as failing to limit losses could have repercussions come claim time. It’s also important to understand what the requirements are when it comes to repairs. For example, do all repairs including urgent ones need to be authorised by the insurer before the work is commissioned?
• Is the insurance on the property a standard building policy or a landlord policy that offers extra benefits? Owners relying on home and contents insurance should read their policies carefully as they may not be covered if the home is rented out. Specialised landlord insurance covers risk unique to investment properties including loss of rent, which can be invaluable if the property is damaged or destroyed and unable to be leased.
• Keep on top of property maintenance as failure to maintain the premises can void the policy.
• Remind tenants that they need their own contents insurance, as your landlord insurance will not generally cover their possessions.

Property owners should take action now to prevent being hit by the fallout from extreme weather conditions. Talk to your property manager/agent or contact a specialist landlord insurer to arrange the right cover and then you can relax and enjoy the summer.