Waterfront insurance too expensive

[justjenny]

Hi all,
Long time reader, recent member, first post.
Hoping some of you will share your opinions with me please.
We have just paid .25% on a property in Wyong Shire which is ALMOST waterfront (one house back) and we're still within cooling off period.
The 149certificate stated something or other about the land being in a flood planning zone. From what I could gather, the land has never actually flooded so the zoning is not based on any historical data, but rather it is based on forecast, due to climate change/rising sea levels etc.
Ok, well I wasn't worried about that and willing to take the "risk". However, I was shocked this morning when ringing around insurance companies to find how seriously they are taking the risk. My own insurance company which currently charges me $700pa for an inland property, quoted me near $10,000 for the exact same policy on this seaside property. Ummmm
I was even told that several insurance companies wont even insure this address for any amount!

I have phoned around many insurance companies and finally got quoted around $1700 with GIO, which in light of other quotes appears very reasonable. But of course there's no telling how much GIO's premium could increase in the coming years.
I'm wondering what other investors think about the risk from a resale point of view? How much do you think the rising costs of keeping seaside property will effect values in the future?
I have always thought that coastal values close to cities will always increase, but maybe the climate change campaign will change the "tide" and future buyers will avoid those once prized waterfront properties? I'm just finding it hard I guess to imagine gazillions of dollars worth of property taking a dive in values and what the repercussions of that would be for the economy.
Any thoughts or comments would be much appreciated. Thankyou.

 

[alicudi]

Hi

I watch this thread with some interest.

My aunty lives in Aspendale Gardens, Victoria in a normal suburban type street. She went to renew her insurance policy just recently and noticed a huge increase in the premium...from what was normally under $1,000 is now over $4,000. She phoned up to ask about the huge increases and they stated it was due to been in a flood prone area etc which could be effected by a 1 in 100 year event.

I live in Patterson Lakes in a waterfront property with beach and a tidal river running straight past my back door and I pay under $1,000 and the area I live in was traditionally a flood zone and swampland till the late 1970's.

Sometimes things just don't make sense.

Regards,

alicudi

 

[vaughan]

... The 149certificate stated something or other about the land being in a flood planning zone.

... Ok, well I wasn't worried about that and willing to take the "risk". However, I was shocked this morning when ringing around insurance companies to find how seriously they are taking the risk. My own insurance company which currently charges me $700pa for an inland property, quoted me near $10,000 for the exact same policy on this seaside property.

Same thing with bush fire areas. Insurers DO take this stuff seriously because it's their money gets spent when the spit hits the fan. I believe that the 149 certificates were implemented especially to force vendors to disclose these issues to buyers.

I just sold a property at Chittaway Bay last year. It's not in the flood zone, but I didn't want to be the last person standing when the music stopped.

How are you feeling about taking on the risk now? Did you end up buying the property?

... I'm wondering what other investors think about the risk from a resale point of view?

Look into property values before and after the Brisbane floods, would probably give you a good idea.

 

[see_change]

We bought a waterfront weekender about 18 months ago . The house is 10 - 20 meters above the Mean high water mark .

An alternative place we looked at , we saw on a spring high tide when a southerly was blowing waves onto the back of the land . In the five mins I stood at the waterfront of that place I saw several reasonable size bits of land being washed away . The house was about 7 meters from the waterfront ,with a minimal rise ( probably 1 foot ) above the bits being washed away . they were asking 700 K for the place .

In certain places it's a risk and a lot of councils have changed their guidelines in the last years as they don't want to give approval for people to build and then be sued because they approved something that's got washed away .

When I started looking at buying a waterfront , i did some searches and I thought this thesis was an interesting example of what can happen even not taking into consideration the impact of rises due to global warming.

Cliff

 

[Rolf Latham]

We have a place on a river.............. WBC home insurance premium isnt any higher than another not on river

ta
rolf

 

[Scott No Mates]

It will pay to review the definition of flood covered by each policy and what is not covered. Is tidal innundation covered? Is stormwater runoff or broken watermain in the street classed as a flooding?

Suss out some of the insurance feedback about the Brisbane floods a couple of years back and see who covered and who didn't.

It could also be to your advantage not to have flood coverage (if you think self-insuring will be cheaper than having paid premiums up to the time the event might occur).

 

[Kinnon Bell]

I had a similar issue recently with my PPOR. I live on a canal estate in FNQ and my house is in the red flood zone. To begin with couldn't find an insurer under $10k let alone one that would cover for flood. For me it ended up coming down to EBM and RACQ. At the time EBM (still don't?) cover for flood but would insure a house vacant in settlement so I went with them. A few months later I moved in and we then went with RACQ who charge $2600 p/a (which I was only able to achieve with massive exceses and no claim discounts and multipolicy discounts) but cover all types of flooding.

I also had a property in Horsham during the 1 in 100 year flood which didn't flood but come next insurance renewal and my premium more than quadrupled! I then had to search for an insurer that didn't have flood cover to keep the premium down...

 

[Angel]

All of my properties are high and dry. Our premiums increased by about 40%each for SEQ after the floods if I remember correctly. I said I didn't want flood cover, we haven't had it for all the time I've been living on top of a hill. Various insurers said I COULD have flood cover if I wanted it, for $7 to $10 per annum extra premium. Same for the house in Gladstone that is on top of a hill.

Each year since 2011, insurers (we've used NAB, Suncorp and EBM) seem to keep changing their definition of "flood".

 

[Macca]

I "passed" on a property because it is "just" inside the 100 year flood level. I may or may not be able to get insurance now but I figure if there is a flood sometime in the future that effects nearby, I will get stung anyway so let it go.

What Seechange said is relevant, if the land rises up from the water course then you may be OK but if the whole area is flat then you could be 200 metres from the water and still be within flood and/or sea level zonings.

Dora Creek has all sorts of problems because it does flood and is flat, I believe it is within Wyong Shire,

 

[nww]

Which Lake are we talking , Tuggerah system or Lake Macquarie.
Would be surprised if it was Lake Macquarie ?.
How much are you looking to insure for ?.

Im on Lake Macquarie with real insurance and only costing me $435
Home excess $1000
Earthquake $500
flooding $500

My biggest gripe is the land rates for full waterfront.
Lake Macquarie residents pay way more than Tuggerah due to
higher land value.

 

[nww]

I "passed" on a property because it is "just" inside the 100 year flood level. I may or may not be able to get insurance now but I figure if there is a flood sometime in the future that effects nearby, I will get stung anyway so let it go.

What Seechange said is relevant, if the land rises up from the water course then you may be OK but if the whole area is flat then you could be 200 metres from the water and still be within flood and/or sea level zonings.

Dora Creek has all sorts of problems because it does flood and is flat, I believe it is within Wyong Shire,

Macca Dora Creek is in LMCC
Wyong shire boundary is the southern end of Lake Macquarie only
Gwandalan,summer land point, Chain Valley Bay, Mannering Park.

 

[justjenny]

Thankyou all for your input,

We don't finish cooling off until the end of next week.
Slept on it last night and still thinking about it. Reading as much information as I can get my hands on (thanks see_change for the Thesis) then more thinking, thinking, thinking.
I guess I've already made the decision to pull out and am basically using my cooling off time to look for a reason not to, because we were so happy about finding this house just a few days ago. The thought of pulling out is very disappointing, but alas I still haven't found any reason not to
For those interested, the property is on Tuggerawong Rd, Tuggerawong NSW and backs onto the lake. The house sits about 50 metres away from the lakes "current" edge, but the issue is the lands height above sea level and apparently land even up to a couple of kilometres inland of this property is zoned to be effected by the risk of predicted rising sea level. The maps can be found at the Wyong council website.
Whether these predictions ever eventuate or not is really irrelevant to me and I personally wouldn't have a problem with not being insured for flood. What is relevant is the fact that these predictions are on paper, being taken seriously by Wyong Council and therefore being taken seriously by insurers, which in turn has to effect value down the track and that's the bit that really concerns me.
If it were a property that was subject to the more traditional flood prone zoning, from say a river brusting it's banks on occasion, this is a risk that can be mitigated by levy banks, building on stumps etc. But if sea levels rise, there's no mitigation for that, once your land is below sea level, it's just gone and that's it. Now, I might not believe that will ever happen (in what's left of my lifetime at least), but I'm pretty sure more and more future buyers are going to believe it.
I've read that Gosford City Council released similar maps/plans several years ago, which they withdrew after much protest from local landowners about the effects on their property values. However, I think it is only a matter of time before all coastal councils will have no choice but to implement the plans to cover themselves against potential litigation, despite the protests of landowners.
Who'd have ever thought that waterfront property could one day become a massive liability? Not me! This experience has been a big learning curve. I wont be around to know if the predictions are right, but I feel by buying this property, I'd certainly be feeling the burden of them none the less.

If anyone has any contribution that disputes my concerns, I'd love to hear them, because I do love this house

Cheers.

 

[Harro]

Thankyou all for your input,

We don't finish cooling off until the end of next week.
Slept on it last night and still thinking about it. Reading as much information as I can get my hands on (thanks see_change for the Thesis) then more thinking, thinking, thinking.
I guess I've already made the decision to pull out and am basically using my cooling off time to look for a reason not to, because we were so happy about finding this house just a few days ago. The thought of pulling out is very disappointing, but alas I still haven't found any reason not to
For those interested, the property is on Tuggerawong Rd, Tuggerawong NSW and backs onto the lake. The house sits about 50 metres away from the lakes "current" edge, but the issue is the lands height above sea level and apparently land even up to a couple of kilometres inland of this property is zoned to be effected by the risk of predicted rising sea level. The maps can be found at the Wyong council website.
Whether these predictions ever eventuate or not is really irrelevant to me and I personally wouldn't have a problem with not being insured for flood. What is relevant is the fact that these predictions are on paper, being taken seriously by Wyong Council and therefore being taken seriously by insurers, which in turn has to effect value down the track and that's the bit that really concerns me.
If it were a property that was subject to the more traditional flood prone zoning, from say a river brusting it's banks on occasion, this is a risk that can be mitigated by levy banks, building on stumps etc. But if sea levels rise, there's no mitigation for that, once your land is below sea level, it's just gone and that's it. Now, I might not believe that will ever happen (in what's left of my lifetime at least), but I'm pretty sure more and more future buyers are going to believe it.
I've read that Gosford City Council released similar maps/plans several years ago, which they withdrew after much protest from local landowners about the effects on their property values. However, I think it is only a matter of time before all coastal councils will have no choice but to implement the plans to cover themselves against potential litigation, despite the protests of landowners.
Who'd have ever thought that waterfront property could one day become a massive liability? Not me! This experience has been a big learning curve. I wont be around to know if the predictions are right, but I feel by buying this property, I'd certainly be feeling the burden of them none the less.

If anyone has any contribution that disputes my concerns, I'd love to hear them, because I do love this house

Cheers.

Plenty of fish in the sea justjenny. Whilst disappointing on this occasion, you have already made your decision. Something else will come along no doubt probably when you least expect it, and be a viable prospect.

Cheers.

 

[nww]

WSC has on display another change in their flooding strategic planning.
Amend floodplain risk management LEP and deletion of 2013 flood planning map to be replaced by council on line flood mapping.

What ever that means.

 

[vaughan]

If it were a property that was subject to the more traditional flood prone zoning, from say a river brusting it's banks on occasion...

The Wyong River does flood, it flooded just a few years ago. Many of the roads around the back of Tuggerah Lake -- around Chittaway Bay -- were under water and closed for days. Not sure if any houses were damaged but likely were.

I don't know why you have such an easy attitude about flood. The result can be your house gets lifted off the stumps or the slab shifts and everything needs demolishing. Your land will be worthless afterwards because nobody will want to, or may be unable to build there again. So you will have to pay to bulldoze everything and not be able to sell what land is left. And you don't feel the need to cover the risk with insurance?

 

[justjenny]

Hi Vaughan,
I have decided not to buy this property because I would definitely be worried about it, because it seems I cannot confirm whether or not this property has ever been inundated in the past.
What I wasn't worried about was insuring against flooding from rising sea levels (in my lifetime at least) if that were the only risk.
I don't know if that makes sense but I was really trying to get to the bottom of why the insurance companies have increased their premiums so much in relation to this particular address. Was it because of rising sea level predictions or was it because of flooding from the river? I am not a local there and only have maps to go by.
Anyway, based on all I have learned over the past 2 days, I will never again even look at any property that is anywhere near a council "Flood Planning" area and rather than count on any council or solicitor to unravel the jargon for me, I have found the simplest way to find out how risky a property is is to just get a few quotes for insurance.

nww, The information I got from the councils latest flooding strategic plan was that my property of interest sat in a "Flood Storage" zone .... whatever that is??? What, are they going to store the flood at my house for a bit, until they find somewhere else to put it?