According to industry-first data compiled by leading insurance expert MCG Quantity Surveyors, Australian property owners are facing a dire underinsurance crisis, with many just one insurance event away from being hundreds of thousands of dollars out of pocket for repairs, potentially leading to extreme financial stress.
MCG's analysis of more than 2,000 reports revealed that across multiple property sectors, Australian assets were, on average, underinsured by 24%.
"Residential property alone is underinsured by 18% on average. So, if a home's true insurance value was $650,000, which is reasonably common, its owner would be up for around $117,000 to cover the shortfall in replacing their destroyed property," said Marty Sadlier, director at MCG Quantity Surveyors.
The situation is even more dramatic in other sectors, with industrial and office properties underinsured by 31% and 24% respectively, delivering a massive blow to businesses' financials when the shortfall needs covering.
Mr Sadlier warned that the adverse outcomes will spread to the wider community, fuelling inflation and potentially leading to the permanent closure of businesses essential to some communities.
The underinsurance crisis has been brought about by a combination of factors, including fast-rising construction costs, unreliable automated insurance calculators, COVID-related supply chain and manufacturing issues, a lack of available labour, and the extraordinary increase in insurance premiums.
"Certain assets have actually been categorised as uninsurable by insurers, while other properties have seen premiums skyrocket to such levels that business operations are no longer viable," Mr Sadlier said.
With a spate of recurring natural disasters in recent years, many homeowners, business owners, and commercial investors may discover too late that their insurance arrangements are woefully inadequate.
Mr Sadlier emphasized the importance and urgency of addressing the situation before the next disaster hits, calling for property owners to get their insurance value accurately assessed and regularly updated, and for government regulation to stop the insurance industry from quoting outrageous premiums that are decimating businesses and leaving Australians at risk of going broke.
According to industry-first data compiled by leading insurance expert MCG Quantity Surveyors, Australian property owners are facing a dire underinsurance crisis, with many just one insurance event away from being hundreds of thousands of dollars out of pocket for repairs, potentially leading to extreme financial stress.
MCG's analysis of more than 2,000 reports revealed that across multiple property sectors, Australian assets were, on average, underinsured by 24%.
"Residential property alone is underinsured by 18% on average. So, if a home's true insurance value was $650,000, which is reasonably common, its owner would be up for around $117,000 to cover the shortfall in replacing their destroyed property," said Marty Sadlier, director at MCG Quantity Surveyors.
The situation is even more dramatic in other sectors, with industrial and office properties underinsured by 31% and 24% respectively, delivering a massive blow to businesses' financials when the shortfall needs covering.
Mr Sadlier warned that the adverse outcomes will spread to the wider community, fuelling inflation and potentially leading to the permanent closure of businesses essential to some communities.
The underinsurance crisis has been brought about by a combination of factors, including fast-rising construction costs, unreliable automated insurance calculators, COVID-related supply chain and manufacturing issues, a lack of available labour, and the extraordinary increase in insurance premiums.
"Certain assets have actually been categorised as uninsurable by insurers, while other properties have seen premiums skyrocket to such levels that business operations are no longer viable," Mr Sadlier said.
With a spate of recurring natural disasters in recent years, many homeowners, business owners, and commercial investors may discover too late that their insurance arrangements are woefully inadequate.
Mr Sadlier emphasized the importance and urgency of addressing the situation before the next disaster hits, calling for property owners to get their insurance value accurately assessed and regularly updated, and for government regulation to stop the insurance industry from quoting outrageous premiums that are decimating businesses and leaving Australians at risk of going broke.
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