A vast zone is being covered by cyclone Alfred warning on Australia’s east coast.
An insurance embargo came into force across over 400km of Australian coastline with no warning to homebuyers and owners that they would be unable to get home and contents cover for their purchases.
Homebuyers attempting to sign up for coverage after buying property since the weekend were in shock after being told to contact the insurer in question for an explanation.
The new cover rejection zone stretches across a vast area controlled by more than a dozen local governments from Noosa all the way down past Byron Bay which are set to be impacted by cyclone Alfred.
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Rejection notes for insurance cover from Brisbane, to the Gold Coast and Byron Bay from insurer Suncorp were the same.
Several attempts to get new home insurance cover as either a landlord or an owner-occupier were rejected Wednesday, with others reporting the embargo was in place as early as Monday when they were unable to get cover.
A rejection note from Queensland-based insurer Suncorp Home Insurance said “sorry, we’re not able to give you cover”.
“Suncorp cannot provide insurance for your suburb at the moment due to potential natural disasters.”
Another provider Defence Services Home explained “depending on the circumstances, DSH Insurance may decide not to sell an insurance policy when an embargo is in place, or may stipulate a period within which we will not accept a claim against the policy, for example 72 hours up to 7 days”.
The embargo throws a spanner in the works for homebuyers in Queensland and northern New South Wales this week given owners are exposed to insurance risk from when they sign their purchase agreements unless they include a clause around the situation.
Residents in Brisbane have scrambled for sandbags to try to protect their property. Picture: Steve Pohlner
The Bureau of Meteorology Wednesday morning update said the warning zone now stretched from “Double Island Point in Queensland to Grafton in New South Wales, including Brisbane, Gold Coast, Sunshine Coast, Byron Bay and Ballina but not including Grafton.”
An Insurance Council of Australia explainer said “insurers often place embargoes on insurance policies to prevent people buying insurance when the risks are elevated or a disaster is approaching and then cancelling cover after the risk passes”.
It said “embargoes on insurance are a normal and accepted practice, and usually apply to new policies”.
“They take effect when events such as fires, floods and cyclones are impacting or considered likely to impact an area.”
“If an insured risk is imminent, the probability of that risk occurring and therefore a claim being lodged is high. Insurers would need to calculate a premium that reflects this elevated risk, rather than averaging the risk over an entire year.”
Surfers have been loving the bigger than usual surf up and down the coastline ahead of cyclone Alfred. Picture: Chris Hyde/Getty Images.
The issue went off on Reddit after a former insurance worker said “most insurers have a 72 “waiting period” for home and contents. So if you’re seeing this at 10am (on Monday) and get insurance, you’ll be covered assuming the storm hits after that. Just a reminder for anyone that needs it.”
One Redditor said “just got denied as ‘in a natural disaster area’”, while another said “I’ve just rung around and I can’t get insured due to the pending weather event. Not that I had the money to pay it anyway, I was getting a loan to cover it Sux to be me I guess, anyone else in the same boat? Cos we might be in a boat come next week, the way things are going”.
Many property auctions across those areas have already been postponed across the days when the cyclone is due to make landfall and pass through the most densely populated parts of Queensland.
The Insurance Council statement said not all insurers imposed embargoes and Australia’s market was large and highly competitive.
“At any one time there are usually insurers who have not enacted an embargo, and property owners may be able to find cover.”
Several attempts to get new home insurance cover as either a landlord or an owner-occupier were rejected Wednesday, with no success for properties stretching from Noosa all the way down to Brisbane, the Gold Coast and along the coastline to Byron Bay. Others have reported that the embargo was in place as early as Monday when they were unable to get cover.
Residents are now being told to “prepare to take shelter” already on the Gold Coast where winds have whipped up wild seas with coastal inundation a big fear for multiple areas, with every other council zone on “prepare now”, “monitor conditions”, or “stay informed” levels.
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