Homes & Relocation Detail
Flood thinking
Towards the end of May heavy rain caused flooding in northern NSW and south-east Queensland.
Clive Herrald of Global Pension Transfers explains what you need to know about home insurance cover in Oz.
When purchasing property in Australia there are a number of questions and searches that need to be asked and done, and there is also a need to insure the property when you exchange contracts with the seller. This will typically occur some weeks before you actually pay for the property, but you need to understand that once a contract has been signed and accepted by the seller then the liability for insurance passes over to the buyer.
Typically, at the time you pay the selling agent a deposit is the time you should take out insurance cover on the property. At this time it is advisable that you obtain at least a cover note from a reputable insurance company as a means of protecting your interests in the unforeseen event that something happens to the property between then and the time you actually hand over the purchase price to the seller.
In the past months we have seen some major bushfires in Victoria, which literally destroyed small country townships. Sadly, many of the homes that were destroyed by fire were not insured or were underinsured, which means for the owners that they will have to start again.
In more recent days we have had some major flooding in south-east Queensland and down the NSW coast as far as the central north coast. The extreme weather patter even extended across the Tasman to New Zealand, where extreme rain and snow was experienced with strong winds and very cold weather. In parts of south-east Queensland we had over one-third of our annual rainfall in just two days.
As a result of the amount of rain we saw, many areas isolated by floodwaters with many properties being well and truly flooded by torrents of water - all of which caused extensive damage to the properties as well as to the furniture and other belongings.
With this in mind, when buying property you need to ask questions about flood plains, and search with local councils for flood records to obtain past flood levels, as well as to ascertain whether there are any council-imposed restrictions to building due to flood risks. A drainage plan of the area is also a good idea. In some cases a property may be on a flood plain but certain remedial work may have been undertaken to minimise any risks.
Home insurance is a critical issue but beware that insurance companies are loathe to offer cover that includes flood cover in areas that are prone to flooding. They may agree to insure the property but include an exemption to claims for flooding. Some insurance companies may not offer any coverage at all for flooding so you need to ask the question if you are purchasing in an area that has been flooded in the past. It is therefore wise to use only the larger reputable companies that do offer such comprehensive cover. You should also consider including cover for home contents as a part of the policy to save on premium costs.
There are a few general rules of thumb to apply: always buy in an elevated area, not on a known floodplain or in a gulley; never underinsure the property, as if a claim is made the payout will be reduced substantially and will inevitably not cover the damage incurred; and make sure you do all of the relevant searches when you purchase the property.
The last thing you would want to happen is to be woken by water lapping at your bed in the middle of the night - that is exactly what happened in some areas during these recent floods. A little research can save you a lot of future heartache.
For more info: Global Pension Transfers
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