the importance of disclosing cladding materials of external walls to insurers
Accurate Disclosure Resulted In 20% Savings On Insurance Premiums
One step to our onboarding process is to review all the information disclosed to the insurer, and for this townhouse estate we found no record of the building’s cladding materials, something the previous manager had ignored. Insurers have become increasingly strict about identifying cladding types, particularly expanded polystyrene (EPS), a foam-based material that poses a significant fire risk (think Lacross Tower in Melbourne’s Docklands or Grenfell in the UK). When cladding details are unknown, insurers tend to assume the worst and price premiums accordingly, or worse, they may decline to provide quotes at all.
At the annual general meeting, we raised the issue directly and worked to identify and document the specific make and model of the cladding. That information was passed on to the insurer ahead of renewal. The result was almost a 20% reduction in the premium, a direct outcome of providing accurate disclosure. For owners, most importantly, that translated into lower strata fees the following year.
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