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| Fri, 25th Nov 2022 9:31:00 |
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The Australian suburbs where more than half of properties will be uninsurable by 2030 |
When Kim Sly moved to a lower-lying area of Forbes four years ago, she was asked to pay $12,000 a year for flood insurance.
The bill was a shock. Her new home was built 1.2 metres above the ground to protect it from floods, a factor that did not seem to influence the insurance company’s assessment.
By now, she would have paid a staggering $48,000 in insurance costs.
“It is a huge amount of money,” she said. “I’ve always believed in insurance. I’ve never not been insured for anything, you know, houses, cars.”
“But for me … it wasn’t an option, because $48,000 is a lot of money, that if we did need to replace carpets etc, it would have gone a long way.”
When the floods hit Forbes this month, the water inundated her yard and shed. She only lost incidentals. “We were one of the lucky ones,” she says.
Just to the east, in flood-ravaged Eugowra, Greg Agustin had his mechanic workshop ruined during last week’s disaster. Half the roof has collapsed and the timber supports broke and splintered from the force of the flood waters.
Agustin said he simply couldn’t afford the exorbitant cost of flood insurance in Eugowra. His prospects of reopening are now dependant on how much support the state and federal governments offer.
“I’m insured for fire, but the flood insurance is impossible,” he said.
“The cost of it. It’s very hard to get flood insurance anyway. Up the road they quoted one lady $25,000, 10 years that’s $250,000.”
New data shows stories like Sly and Agustin’s are becoming increasingly common. Rising costs associated with climate crisis hazards are making more and more homes uninsurable.
Data from Climate Valuation shows there are at least 17 Australian suburbs where more than half its properties will be uninsurable by 2030.
The chief executive of Climate Valuation, Karl Mallon, said the prediction that properties would become too expensive to insure due to global heating is unfolding faster than expected in the wake of this year’s flood disasters in Australia’s eastern states.
“We are now hearing about traditional insurance companies starting to withdraw cover. Where they’re saying, well, we don’t want to keep offering coverage in this particular town,” Mallon said.
“We thought we had a bit of time but I think things are unraveling fairly quickly now.”
Mallon predicted a severe price shift in insurance is on the cards not only for areas hit by the most recent flood disasters, but “frankly any flood zones” around Australia.
Climate Valuation classifies a property as high risk and will use the phrase “uninsurable” when the technical insurance premium exceeds 1% of the replacement value of a house.
Climate Valuation classified 10-20% of Eugowra’s properties at high risk. However, 90% of its buildings sustained damage from flood waters last week.
Mallon said in the recent floods “some of the places that we’re seeing flooded very severely are places that in our flood data would be considered at low risk.”
“This is one of the things we’re very worried about as scientists and engineers is that it may be that our flood models have underestimated some of these risks. Lots of places, we’re getting it right … but we’re seeing some places that have flooded very severely are much higher than we would have expected.
“And so this is leading to some big questions being asked in the industry about whether we need to update our data … maybe things are much worse than we would have predicted in certain places.”
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