Time to review your property insurance as rainy season approaches

With climate-related disasters becoming common every year, homeowners must understand the threats their properties face and how to mitigate them. The City of Cape Town recently reported that 15,000 people have been affected by flooding in Cape Town.

Severe wind and rainfall since have resulted in road closures, towns being isolated, electricity disruptions and school closures. The flooding was widespread affecting areas that include Tableview, Sea Point, Kalk Bay, Fish Hoek, Muizenberg, Retreat, Wynberg, Greenpoint, Woodstock, Kensington, Kraaifontein and Bellville. Homes in Khayelitsha, Lwandle and Nomzamo in Strand, Gugulethu, Philippi, Masiphumelele, Philippi East, Mfuleni, Tafelsig, and Vygieskraal.

“As the rainy season is approaching, homeowners need to be more aware of the right coverage to insure against weather-related losses. However, insurers and reinsurers are already grappling with changing risk profiles influenced by extreme weather events,” Sharon Paterson at Infiniti Insurance Limited.

“We are beginning to see increases in premiums and exclusions in regions highly exposed to weather-related risks. For example, in recent years, natural-catastrophe-related coverage exclusions were applied by some insurers in some locations in the KwaZulu-Natal province following the persistent widespread floodings,” she explains.

In these circumstances, property owners should also seek the advice of an insurance broker with expertise in the physical risk associated with natural catastrophes. Aging and under-maintained infrastructure exacerbate flood risk. Given South Africa’s exposure to natural catastrophes, it’s critical to ensure that building practices are adapted to mitigate risks such as floods, hails, and thunderstorms and that buildings are well maintained.

As we get to summer, there is a high probability for many areas in the country to experience natural catastrophic events. Having a broker can help homeowners manage their risk exposure by advising them on investing in long-term preventative measures to mitigate and reduce the impact of catastrophes. “These mitigating measures can be various actions such as undertaking regular repairs or maintenance, managing encroaching vegetation and hardening properties to reduce the risks of fire and other extreme weather events that can ravage the home,” Paterson explains.

She says the insured property owners will absorb the costs of all these preventative measures. But the insurer can also incentivize the client by offering them reduced premiums for putting in place all these mitigating steps. “As insurers, we have a critical role to play in building risk awareness and facilitating investments in resilience strategies and improving building efficiency,” she adds.

Paterson says in some cases, clients need to be made aware of the availability of insurance products and to be made aware of their exposure to the risks. “This is the time when the role of brokers becomes more critical than ever in educating clients to assess the risks and put mitigating steps in place or update their cover. The broker must help assess the risks of underinsurance and provide regular updates and advice on any adjustments to their cover as new risks emerge,” she concludes.