If there’s one silver lining out of the arduous lockdowns experienced during COVID, it’s that the rate of house break-ins has dropped. As painful as they have been, stay-at-home orders have correlated with an average 37% reduction in crime around the world, according to an international study endorsed by the University of Queensland.
It’s a good thing too, because Australians are chronically under-insured.
We’ve mentioned before that 83% of properties have been underinsured for the past 20 years. That means these properties are only covered for 90% or less of the actual replacement cost required.
Worse than that, according to the Australian Bureau of Statistics, some 1.8 million Australian households have NO house and/or contents insurance AT ALL.
That equates to 23% of all Australian homes, without insurance.
Not surprisingly, the report found that the existence and level of insurance was closely related to the economic circumstances of the inhabitants.
Typically home owners and tenants on lower incomes are less likely to have both building and contents insurance.
These people with little or no insurance are greatly exposed in case of a loss, and can likely least afford to replace stolen or damaged property or belongings.
It’s not only tenants of rental properties who have neglected to take out insurance. Although the rate of non-insurance is much lower for those with mortgages, it is still significant.
Of course, income is not the only determinant for the level of under-insurance.
Other factors that are closely correlated with under-insurance include:
- Age or life-stage – younger people are less likely to have adequate insurance;
- location – those living in cities and in particular regions within cities;
- country of birth – people born in non-western countries;
- education – those with lower levels of education;
- employment status – people without full-time work.
Whilst it might seem like a saving to forgo insurance, particularly when so many of us are home right now, it’s a false economy. As we emerge from this pandemic and are out of the house a lot more, the risk of a break in or damage inevitably increases.
Isn’t it time to get your (financial) house in order?