A vast zone is being covered by cyclone Alfred warning on Australia’s east coast.
An insurance embargo has been implemented along more than 400km of the Australian coastline, catching homebuyers and owners off guard as they discover they are unable to obtain home and contents cover for their properties.
Homebuyers who attempted to secure coverage after purchasing property over the weekend were shocked to learn that they needed to contact the specific insurer for an explanation.
The insurance embargo zone spans a large area controlled by multiple local governments, stretching from Noosa to Byron Bay, which are expected to be affected by cyclone Alfred.
Rejection notes for insurance cover from Brisbane, to the Gold Coast and Byron Bay from insurer Suncorp were the same.
Numerous attempts to obtain new home insurance coverage, whether as a landlord or owner-occupier, were denied on Wednesday. Insurers, such as Suncorp Home Insurance, cited the inability to provide coverage due to potential natural disasters in the affected suburbs.
Another provider, Defence Services Home, explained that they may decide not to sell an insurance policy or impose a waiting period during an embargo.
This insurance embargo poses challenges for homebuyers in Queensland and northern New South Wales, as they are exposed to insurance risks from the moment they sign their purchase agreements, unless they include a clause addressing this situation.
According to the Bureau of Meteorology’s latest update, the warning zone now extends from Double Island Point in Queensland to Grafton in New South Wales, including Brisbane, Gold Coast, Sunshine Coast, Byron Bay, and Ballina. However, Grafton is not included in the zone.
The Insurance Council of Australia explains that embargoes on insurance policies are a common practice to prevent individuals from purchasing insurance during high-risk periods and then canceling the coverage once the risk has passed.
The council also states that not all insurers impose embargoes, and property owners may still be able to find coverage from insurers who have not enacted an embargo.
Residents in the affected areas have reported difficulties in obtaining insurance coverage, with some expressing frustration and concern about the impending weather event.
Property auctions in the affected regions have already been postponed due to the cyclone’s expected landfall and its potential impact on densely populated areas.
Despite the challenges, it’s important to note that the insurance market in Australia is large and highly competitive, offering opportunities for property owners to find alternative coverage options.
Residents are advised to prepare for potential sheltering and take necessary precautions as the cyclone approaches.
