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    Holiday Rental Insurance: Rising Premiums & Cost Mitigation

    The current cost-of-living crisis means many Australians are struggling, with over 3.3 million Australians currently living in poverty and 40% of renters struggling to pay rent as explained by The Salvation Army. Many items are rising disproportionately to wage growth, and Forbes notes insurance premiums are also becoming caught in this inflation. 

    A combination of factors have led to a recent rise in insurance premiums that has impacted the Holiday Rental Insurance landscape. Understanding the cause of this rise and recognising ways to mitigate increases is important to ensure you acquire the most affordable Short Term Rental Insurance available to you to protect holiday homes and rental properties.

    What are insurance premiums?

    As explained by the Insurance Council of Australia, a premium is the amount you pay an insurer for insurance cover. A premium will generally reflect the likelihood that you will make a claim, and may be influenced by the cover type, optional benefits, previous claims history, the frequency that you pay the premium (annually, monthly, or instalments), the desired amount of cover, risk assessment, and level of excess. 

    Factors impacting the rising costs

    Recent natural disasters

    The increased frequency and likelihood of natural disasters such as fires and floods in holiday areas has impacted the rising premiums. In 2022, there were more than 302,000 disaster-related claims lodged from four different insurance events across the country, costing $7.28 billion in insured losses as stated in the Insurance Catastrophe Resilience Report. The east-coast floods in 2022 were the most expensive insurance event in the nation’s history.

    Australia’s risk of disaster is increasing and with this risk premiums also continue to rise. 

    Claims Escalation costs

    As inflation of materials and labour shortages drive up the cost of building, new homes and infrastructure, this also increases claim payments. Premiums are therefore driven up to combat this. 

    Ways to mitigate cost escalation

    1. Review excess structures

    Excess structures coverage includes cover for loss or damage to building and contents due to extreme weather events. You should review this cover to ensure that you are not paying too much or too little. Note that a higher excess leads to a lower premium, so you may increase your excess if the additional risk is acceptable. 

    2. Obtain alternative options

    If the specific policy that you are holding has a high premium, it may be a good idea to look around at other Insurance Products with other Insurers to determine if there is a more affordable choice available. An Insurance Broker is the ideal choice to ensure research is conducted into the potential options and determine the best alternative. 

    3. Lower risk

    Taking risk management procedures to avoid the likelihood of claims or reduce the impact of incidents is one way to lower premiums. If you take steps to lower your risk such as additional security devices or measures to mitigate the impact of natural disaster, you may receive a discount on your policy. 

    4. Pay annually

    Generally, it may seem more affordable and flexible to pay Short Term Holiday Rental Insurance in instalments. Providing one lump sum annually will often cost you less overall, though smaller, more frequent payments may seem more inexpensive. 

     

    Affordable Holiday Rental Insurance cover with Atlantic Insurance Brokers

    Atlantic Insurance Brokers can assist in developing an affordable, tailored Insurance Plan that works to your budget. Having provided reliable Insurance Solutions Australia-wide since the early 1980s, you can expect a high level of client service and satisfaction. 

    Contact us today to discuss your Short Term Stay Insurance needs and ensure your holiday home is protected this holiday season.

     

    Any information contained on this page of the website is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Your should consider these, having regard to the appropriateness of this advice and the relevant Product Disclosure Statement (‘PDS’), Target Market Determination (‘TMD’) and Financial Services Guide (‘FSG’), which will be provided following any formal recommendation to you.

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