Underinsurance in coastal areas has been one of the main concerns of insurers and policyholders as sea levels continue to rise due to climate change. Now, Climate Valuation, a company that assesses the future risk to houses and property from climate change, has warned about the future of properties in coastal areas regarding insurance.
Karl Mallon, the chief executive officer of Climate Valuation, said many homebuyers do not realise how seriously mortgage lenders and insurers are considering climate change risks.
He explained that places at risk of rising sea levels, bushfires, or other natural catastrophes, like the Queensland coast, would continue to face challenges.
“We think it’s now a matter of weeks and months before mortgage lenders start to refuse to lend mortgages on these properties,” Mallon said, as reported by ABC.
The Insurance Council of Australia (ICA) said no region in Australia is currently uninsurable. However, it warned that some regions might become difficult to insure unless governments invest in appropriate physical mitigation and adaptation strategies, as reported by ABC.
Mallon also warned that properties on the Queensland coast could face underinsurance in the future.
“I’ve got testimony after testimony of people who’ve said, ‘look, it just got to the point where I couldn’t afford [the insurance] anymore’. And then they ticked a box which said, ‘I don’t want flood cover’,” Mallon said.
“At that stage, every year, they’re playing Russian roulette. The reason that [insurance] was expensive is because it was likely to happen.”
Mallon suggested raising houses on stumps or building flood barriers around houses as an option for making them more resilient. However, it is likely that some low-lying areas will become unliveable over the next century.
