As climate change continues to alter our planet's landscape, New Zealanders are increasingly facing the physical and financial risks associated with extreme weather events. From the devastating impact on our investments, cars, and personal property to the potential knock on effect of higher insurance premiums, the repercussions of climate change are becoming more apparent than ever.
As an investor, it’s crucial to understand how climate change can affect your insurance coverage and what proactive steps you can take to mitigate these risks.
Impact on Insurance Premiums
Climate change-induced events such as floods, storms, and wildfires pose significant risk to commercial investors, not only threatening their safety and security but also causing considerable financial burden due to the cost of repairs, property damage, and higher insurance premiums.
For insurance providers, the rapid rise of weather-related insurance claims – and the higher cost of pay outs – inevitably leads to raised premiums or, in extreme cases, refusing coverage altogether, leaving some commercial real estate investors vulnerable and unprotected.
This escalating trend of extreme weather events around the world and here in New Zealand only serves to underpin the extreme urgency of addressing climate-related risks proactively, to ensure the stability of insurance premiums and insurance cover.
How to Mitigate Risk
Here are some practical steps to mitigate risk and protect against the impact of climate change on insurance cover:
When buying a new commercial property, carefully consider its geographic location and susceptibility to climate-related hazards such as flooding, coastal erosion, or rising sea levels.
Choosing a property in a low-risk area could help reduce the incidence of weather-related claims and potentially the cost of your insurance premiums.
Conduct thorough due diligence inspections to assess any potential risks associated with the property, such as inadequate drainage systems or structural vulnerabilities. Engage the expertise of a specialist building inspector to identify any existing issues that may impact the property's insurability and assess the property's resilience to climate-related hazards.
Partner with a knowledgeable insurance adviser and get expert advice around assessing potential climate-related risks and exploring insurance solutions tailored to your specific needs.
An insurance adviser can offer valuable insights into policy options, coverage limits, and risk management strategies to protect your investments and assets from the escalating impact of climate change weather events.
Safeguarding Your Investments and Your Finances
As a commercial property investor in New Zealand, it’s important to find ways to safeguard both your property and your wellbeing. Taking proactive measures to address climate change risks and finding strategies to strengthen resilience goes some way towards reducing the likelihood of insurance claims and higher insurance premiums.
Contact your local NAI Harcourts office today who will connect you with an experienced insurance adviser today.
Source: mortgage-express.co.nz