The Australian Securities and Investments Commission (ASIC) has released a report finding that cash settlements from home insurance claims after cyclones are leaving many Australians without enough money to repair or rebuild their homes.
The report, which examined claims following recent cyclone disasters, found that policyholders who accepted cash payouts often received less than the cost of necessary repairs, leaving them underinsured.
Shortfalls in Cash Settlements
ASIC's review of home insurance claims after cyclones revealed that cash settlements frequently fell short of the actual rebuilding costs, particularly for older or custom-built homes.
The regulator identified that many policyholders were not aware of the full extent of their coverage or the potential shortfall until after they had accepted a cash offer.
Impact on Vulnerable Australians
The report highlighted that vulnerable Australians, including those in regional and remote areas, were most affected by these shortfalls.
ASIC said it would work with insurers to improve the way cash settlements are calculated and communicated, aiming to ensure policyholders understand the risks of accepting a cash payout before making a decision.
