$5000 Natural Disaster Insurance Excess

My recent blog suggesting that coastal properties may be overpriced because of coastal flooding and erosion hazards and that insurance companies will “retreat” from these risky areas was criticised in some quarters.  It was suggested that even talking about these things was a step too far.  Apparently, it would only encourage insurance companies to take action to reduce coverage or raise excesses earlier than they otherwise would.

Well, that horse has well and truly bolted.  Back in 2012 insurance companies imposed a $5000 excess on natural disaster claims.   

 So while you might get some relief from EQC for land damage, if you need to top that up– say to repair a damaged driveway – then you’re going to have to pay the first $5000 yourself before you will receive any payment from a private insurer.

This $5000 insurance excess applies all around the country to all types of natural disaster land damage including coastal hazards.

The idea that a local individual discussing a topic which has already been widely canvassed in the national media would cause insurance companies to act is nonsense.  Insurance companies have the most sophisticated risk modelling on the planet, and the not going to be swayed by a small town blog.

They began raising excesses for natural disaster land damages 6 years ago, and following the January 5 storm surge event have also refused to re-insure in some local cases. When the CEO of the Insurance Council, Tim Grafton came to Thames last year he gave a blunt warning that you will not be insured for damages arising from sea level rise.

Rather than stick our fingers in our ears and put the blinkers on, we have to face up to the reality that risky coastal property is going to face a significant drop in value as insurance companies and banks retreat.

Forewarned is forearmed.

Learn more …. 

Professor Noy on insurance retreat

Builds Magazine articles on Insurance retreat


19 March Q And A interview with CEO of Insurance Council Tim Grafton