Cairns insurance hike causes property to drop 30% in value: Shine Lawyers investigating
A Cairns local is facing a 10-fold increase in their strata insurance premium following Cyclone Yasi, and Shine Lawyers is now investigating the situation.
Claiming that an increase in the strata insurance has caused a 30% drop in their clients' property value, Shine Lawyers noted that this is a wide-spread issue in North Queensland, with an online petition calling for fair insurance premiums netting more than 5,500 signatures.
Property Observer gathers that the strata insurance increase for this case, a unit in a block of 16, was from $3,600 to $36,000. The owner bought the property six years ago for $165,000, and a similar unit recently sold for $98,000.
Head of disaster recovery team, George Newhouse, provided the following tips for property owners in natural disaster areas who may also be fearing premium increases.
1. Shop around – Don’t accept exorbitant premiums. Shop around and take advantage of any competition in the market by comparing quotes and asking insurers to ‘do one better’ than their competitors.
2. Limit the scope of your insurance – Have a close look at your insurance cover and reconsider any aspects or extras that aren’t necessary. Seek professional advice if you need it.
3. Use an Insurance Broker – Seek out the assistance of a reputable insurance broker with the skills and experience to locate appropriate cover at competitive premiums.
4. Apply for alternative arrangements – Where a body corporate is unable to comply with their legal requirements to insure, apply to the Body Corporate Commission to have alternative insurance arrangements put in place.
5. Contact your local MP – Call on your local representative to look into the issue and consider whether wider government intervention is necessary. The options from here may be to call for an enquiry from the ACCC, request for the government to place a cap on the premiums that can be charged or provide funding to areas facing insurance hikes following natural disasters.
Source: Shine Lawyers' George Newhouse
The petition, currently available on change.org notes that premium increases are "driving homeowners to the wall" with units, large complexes and resorts often facing 200 to 800% increases and house premiums beginning to rise.
The petition is asking people to sign the following letter addressed to insurance companies and politicians.
These are the major problems we want you to address:
1. Increases in premiums of 200-800% for unit owners, and now house owners in North Queensland
2. Withdrawal of insurance companies from the North Queensland market
3. Transparency of commissions and payments on insurance invoices
4. Lateness of advice, in one case 36 hours to raise over $100,000
These are the effects on communities of the problems above:
1. Inability of owners to pay body corporate fees and insurance premiums
2. Strata properties needing special levies required to cover insurance premiums
3. Loans set up to pay Body Corporate insurance premiums, involving more cost
4. Owners either moving out of their homes entirely or into different accommodation and renting their properties
5. Mental anguish and depression
6. Marketing properties has been close to impossible, even though mortgagee in possession sales increased dramatically
7. Reduced purchasing power and rent increases
We need:
1. An environment created in which insurance companies can return to the market and offer affordable insurance premiums to the people of North Queensland.
2. The recommendations resulting from the Cross Party Federal Parliamentary Inquiry held in February 2012 to be actioned in full - all 9 of them
3. The Insurance Council of Australia to concede there has been market failure in North Queensland
We want:
1. Sensible and affordable insurance premiums for all types of properties in North Qld
2. Transparant insurance invoices showing all payments to anyone concerned
3. Competition in the marketplace
4. Insurance premium rises to be capped (as with rents) and backdated to 2010-2011
5. At least 4 weeks notice of renewal premiums to allow for the monies to be raised and paid
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