Flooding is a major and worsening risk for many Australian property owners.
Recent findings from Monash University reveal that 370,000 homes and 120,000 commercial properties face a 1% annual risk of flooding. That translates to a significant number of properties at risk. Plus with climate change, these risks are expected to rise even further.
Whether you’re a homeowner or running a business, you can always expand and update your understanding of flood risk and how it might impact your insurance coverage as well as property value.
Before we plunge in, do any of these misconceptions resonate with you?
- I don’t live near a water body, so there’s no risk
- I’m protected because my property is above the flood level
- I live on a hill, so I’m fine if there’s a flood
- My property has never flooded before
- Flood insurance only applies to high-risk regions OR you can’t get flood insurance if you live in a high-risk area
- My property insurance should cover flood damage
- A little flooding won’t mean serious damage, and
- Governments will step in to help with covering flood damage.
How Floods Impact on Insurance and Property Values
Higher risks of flood flows through to insurance markets. Insurers raise premiums or, in some cases, raise the hurdle for property owners in flood-prone areas to secure any insurance at all.
Certain policies exclude coverage for ‘actions or movements of the sea or storm surge’. That exclusion means some standard home or business policies may not cover damage from storm tides and coastal erosion. That’s tricky if you’re based along the coast.
There are more challenges. Increasing risks of floods also impact your property’s value. Would-be buyers are becoming wary of investing in high-risk areas, which means demand could decrease, driving down property prices. If you’re thinking of selling, or even just concerned about your property’s long-term value, this is something to keep in mind.
Climate Change Accelerating the Problem
The science behind flooding risks is well-established. Climate change is accelerating glacier and ice sheet melting, which is expected to contribute to rising sea levels by 2100. This spells trouble for coastal communities, with an increasing risk of flooding and more frequent extreme weather events.
What does this mean for property owners? More floods, more storms, and greater challenges in keeping properties safe. Check out the issues in your region via the Climate Council’s Climate Risk Map of Australia.
The link between carbon emissions and climate change is undeniable, according to the United Nations. As CO2 levels rise, so too does the speed at which the ice caps melt. This is leading to more severe weather events across Australia, including stronger storms, flash floods, and coastal erosion. This cycle won’t ease up unless serious action is taken, and until that happens, property owners are bearing the brunt.
Preparing your Property from Floods
While no one can prevent a flood, you can minimise the impact on your property, including these tactics:
- Invest in flood-resistant infrastructure, such as raising your home or business elevation to help reduce the risk of damage
- Consider using water-resilient materials (tiles, polished concrete or brick flooring and walls) or carpet tiles for easier replacement
- Looking into flood vents in walls or doors set at about 300mm above ground level to let water enter and exit at the same rate, which minimises strain on the building’s structure
- Keep up with maintenances – think clean gutters, sweeping debris from around drains, ensuring pipes are free flowing, check for building leaks, etc.
- Install flood barriers and using water-resistant building materials
- Regularly assess your property’s flood risk, such as through flood mapping technology
- Find out how developers, certified builders and local governments tackle zoning and infrastructure planning to address the flood challenges, and
- Get savvy about the different flooding types that could affect your property, including riverine, flash flooding, storm surge, etc.
As well, review your insurance policies to ensure they provide the necessary coverage. Not all insurance policies are created equal, and with flood risks on the rise, it’s crucial that your policy covers you for this specific hazard. Work with us, as your insurance broker or adviser, to reassess your risks annually, especially as weather patterns shift.
Navigating an Uncertain Future
The future of flood risks in Australia is uncertain. Despite that extreme weather events are increasing, and property owners need to be prepared. Insurance is a key part of the solution, but could be a lifesaver in protecting your financial future.
By staying informed, reassessing your risk regularly, and working with your broker or adviser, you can mitigate the worst of the financial impacts and protect your property for the long term. We’re here to assist.