New toolkit provides tips on how to disaster proof your finances
Natural disasters are a frightening reality of the Australian Summer. Last year Victorians watched on as fires tore through bushland and communities along the State’s iconic Great Ocean Road. In the floods that hit Queensland in the summer of 2010/11, 29,000 homes and businesses experienced flooding.
People living in high risk areas have long known the value of preparing their properties to reduce the risk of damage, but less attention is paid to the importance of disaster proofing our finances.
That’s why, in collaboration with the Queensland Government, Good Shepherd Microfinance has produced the Money Ready Toolkit, which helps people mitigate against the financial impact of natural disasters.
The first issue it covers is insurance – making sure you’re covered and that you’re covered for the right amount. Here’s my top five insurance tips to get you thinking.
Have you got the right policy?
Residents looking to rebuild in the wake of the Great Ocean Road fires have found that rebuilding may cost more than expected. One couple in Wye River were given a new ‘Bushfire Attack Level’ rating on their block of land, meaning they’ll need to rebuild to new standards, adding an estimated $150,000 to the cost of their rebuild.
Most home insurance policies are ‘sum insured’, meaning you’re insured for a set amount of money. Do some research and make sure you’re insured for a realistic amount. Talking to your local council or someone who has recently built in the area can help provide a guide to the likely costs and whether your area has any specific issues you’ll need to factor in.
Before choosing a policy make sure you read through any exclusions, caps or limits so there are no nasty surprises if you need to make a claim.
Don’t leave it too late
If you wait until there’s a storm bearing down before you think about insurance, you may have left it too late. Many insurers place a moratorium on new policies in advance of looming storms, floods or fires. So get your policy in advance of the high risk season.
If in doubt, make a claim
If you experience loss or damage and are unsure whether or not you’re covered, lodge a claim. Even if a member of the insurer’s customer service team suggests that you’re not covered, you can lodge a claim and have the insurer make a full assessment. That way, should you be unhappy with the insurer’s decision, you have avenues of appeal. You can take the matter to the insurer’s internal complaints process and, if you’re still unsatisfied, you can escalate it to the Financial Ombudsman Service for an independent decision.
If you don’t lodge a claim you won’t be able to appeal the decision with the insurer or the Ombudsman and may be left without a leg to stand on.
Think insurance is out of reach? Think again
Affordability is one of the main reasons nearly 20 per cent of adults in Australia go without general insurance protection for their car, home or contents. That’s why Good Shepherd Microfinance has worked with two of Australia’s largest insurance companies to design insurance products for people on low incomes. Essentials by AAI allows customers to comprehensively insure their car, their home contents or both. Insurance 4 That is a single item insurance policy that allows people to insure the items they value most. Both policies come with flexible, affordable payment options.
Don’t set and forget
A lot can happen in a year. The value of your home and contents may change, and tougher building standards may have been introduced, increasing the potential cost of rebuilding you home. So when you receive your annual renewal notice, make sure it still meets your needs.
The insurance market may also have changed since you chose your policy, and there may be more appropriate or more affordable policies available. If you set and forget you risk being underinsured or paying more than your need to.
Now is a great time to download the Money Ready Toolkit and ensure your finances can weather whatever nature has to throw at you.
by Renee Hancock
General Manager, Innovation and Marketing
Good Shepherd Microfinance
Queensland Flood Royal Commission Inquiry, Final Report, p 31
 Centre for Social Impact and NAB, Measuring Financial Exclusion in Australia, 2014, p 18
By Renee Hancock, General Manager – Innovation and Marketing — 22nd December 2016