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Housing tenure key driver for underinsurance

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Suburbs with a high proportion of rental properties are likely to have a greater degree of underinsurance regardless of whether the area is wealthy or poor, research has shown.

A University of Tasmania study that focused on Hobart and Glenorchy found home tenure differences can mean some wealthier suburbs appear to have significant underinsurance rates, while less affluent areas with high home ownership levels may have greater levels of cover.

“The take home message is that while income remains a significant indicator of underinsurance risk, renters, both poor or rich, are much more likely to be underinsured than home owners due to a lack of contents insurance,” Senior Lecturer in Human Geography and Planning Kate Isabel Booth says in an article on The Conversation website.

The article includes a map that estimates suburb-by-suburb insurance levels across Australia, based on the Tasmania study and data from the 2015 Australian Survey of Social Attitudes and the Australian Bureau of Statistics.

Rising property values have driven more people into long-term renting, while households experiencing financial stress due to an increasing portion of their budgets spent on rent are more likely to go without insurance.

“Climate-exacerbated disasters are also driving changes in the affordability and availability of house and/or contents insurance,” Dr Booth says.

“Together, these trends in housing, renting, climate change and insurance could potentially create new pockets of entrenched disadvantage.”

High levels of underinsurance have implications for neighbourhood resilience after disasters hit, the article warns.

“Even if you’re well covered, your neighbourhood may struggle long after the dust has settled, as houses lie derelict, people struggle to bounce back and social cohesion frays,” Dr Booth says.

The full article is available here.