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Where home insurance costs $30,000 a year – or you can’t get a policy at all
By Max Maddison
Insurers have begun rejecting insurance reapplications for homeowners in the flood-ravaged Hawkesbury-Nepean Valley, amid questions about the liveability of areas of Sydney at risk of extreme weather events.
For those companies still offering insurance in the area, Insurance Australia Group foreshadowed soaring premiums could preclude households from renewing their policies, with costs reaching into the tens of thousands of dollars in some instances.
Scott Hinks in his Windsor backyard, which was under approximately four metres of flood water. Credit: Kate Geraghty
The decision by insurers to vacate natural disaster-prone areas comes as fears of another serious bushfire season intensified amid growing expectations of an El Niño system and the state’s preternaturally warm winter.
The Insurance Council of Australia – the peak body for the general insurance industry – said the increasing frequency and severity of extreme weather events would impact the affordability and availability of insurance in vulnerable areas.
“This is especially the case for homes and businesses in the Hawkesbury-Nepean Valley, where some have been built in the direct line of flood, putting lives and livelihoods at risk,” a spokeswoman said.
Residents in the Hawkesbury-Nepean Valley, extending about 63 kilometres from Lower Portland to Emu Plains, were hammered by four major floods over two years, with the most recent in July 2022 resulting in $274 million worth of damage.
Despite having one of the greatest flood risks in NSW, successive governments allowed widespread development on the Hawkesbury-Nepean Valley, placing thousands of homeowners at risk of inundation.
A spokeswoman for the insurer Hollards told the Herald the “difficult decision” had been made to limit the offering of home and contents insurance policies for properties at risk of extreme weather events to try to ensure premiums remained manageable.
“After careful consideration, Hollard has made the difficult decision not to offer renewal of some insurance policies for properties in the Hawkesbury/Nepean region that are at increased risk from extreme weather events to avoid significant price increases for most customers who aren’t impacted by increased risk,” she said.
QBE said home and business insurance renewals in the Hawkesbury-Nepean were “dependent on an individual’s property’s circumstances and risks”.
Areas along the Hawkesbury River were hit by major flooding in 2021.Credit: Getty
After moving to Windsor in 2020, Scott Hinks lived through a pandemic and successive floods, with waters lapping at his doorstep. Now his home and contents insurance renewal has been knocked back by Budget Direct, owned by Auto & General.
“The government doesn’t do anything about flood mitigation, and you can’t get insurance. So, you’re hit from both ends of the spectrum,” he said.
Hinks said apathy within the community had become entrenched as successive solutions promised by politicians failed to materialise.
Noting the “saturation of For Sale signs” in his local area, Hicks said his experience was evidently not isolated, calling for a government buyback of flood-threatened homes.
“People are seeing the break in the weather and saying we’ve got to rely on people having short-term memories, let’s sell,” he said.
Budget Direct was contacted for comment.
Most lenders require buyers to have home building insurance as a condition before providing a mortgage for a property.
Even if consumers could obtain an offer, the cost could be prohibitive, Australia’s biggest general insurer, IAG warned.
“The key challenge in high-risk flood areas is insurance affordability, as a customer’s premium will reflect their exposure to severe weather and level of risk at their property,” a spokesman said.
Industry sources suggested some homeowners could be slugged with premiums of up to $30,000 per year. An NRMA quote for home and contents insurance on a Windsor property returned an annual premium of nearly $9500.
NSW Local Government Association President Darriea Turley, however, lashed the behaviour of insurance companies after recent bushfire and flooding events. She called for a renewed emphasis on mitigation measures to reduce the amount spent on recovery funding and premiums for households.
“We’ve heard anecdotally that communities have some serious concerns about the behaviour and actions of insurance companies in the wake of natural disasters,” she said.
A spokeswoman for the Department of Planning and Environment said the NSW Reconstruction Authority had been established to consider and plan for risk to life and property in the Hawkesbury-Nepean Valley.
But she said homeowners were “made aware” of flood risk through planning certificates when the house was purchased.
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