Lessons learned from a fire in Brisbane – Part 2

Last Friday, I posted an article about a fire in Paddington with a reminder and 2 of 3 warnings.

Timg_5592he final warning I wanted to discuss is concerns towards donations to the victims in such circumstances. As humans, most of us have a caring and protective gene which kicks in when we see good people suffer a loss or injury. I am a firm believer that it is far better to give than to receive but I also believe in an equally valid saying of “God helps those that help themselves”.

What I am questioning is the unintended consequences when we help people, who if we are honest, failed to help themselves.

The tenants in the home elected not to take out contents insurance. A caring friend conducted the digital equivalent of passing around the hat and collected around $50,000.

Quotation obtained online from AAMI for $50,000 contents insurance

Quotation obtained online from AAMI for $50,000 contents insurance

I jumped online and obtained a quotation for $50,000 of contents insurance in a home of similar construction to the ones destroyed and in the same suburb. The quote was $438.50 per year or $8.42 per week, from the first direct insurer that came to mind, here AAMI. (See image right)

For the sake of foregoing less than 1/2 packet of cigarettes or 2 lattes over the course of the week they could have had contents insurance.

While I am in no way criticising the caring friend for jumping in and doing something that the tenants should certainly appreciate, I admit I personally do not donate to people who could have had general insurance to cover their loss. Before you think I am heartless I would like to share my logic. When this sort of story makes the papers, as this one has, I believe that it gives others a false sense of security that they do not need home or contents insurance. Others will come in and bail me out so why waste the money on insurance.

There are several reasons I do not like this happening. The first is that white knights may not always be there. Particularly during natural disasters such as severe storm events or bush fires. Secondly, contents insurance covers more than fire. It also provides protection for burglary, water damage [not necessarily flood] and most important of all, millions of dollars of public and personal liability insurance. In the case of AAMI it would be $20,000,000 of public liability coverage.

Not having insurance on their contents then in turn could lead to, I do not need car insurance or insurance on my business. Others will always bail me out.

If a tenant is found to have caused the fire, say leaving the chips on the stove, knocking over a candle or leaving clothes too close to a heater, the landlord and or their insurer would seek recovery for the damage to the building. In the Paddington case, I am not for one minute suggesting the tenants here did anything wrong but if they had done, they could be up for not only the building they occupied but all the damage to surrounding properties. With contents insurance they would have had coverage for this in the case of AAMI.

With high stamp duties in this country on both the insurance premium and the GST component creating a double taxing situation, meaning in the quotation above from AAMI the taxes paid on the insurance are $76.10 being a huge disincentive already, I do not like to see any other reason put to consumers not to take out home or contents insurance when the protection offered is so important to the financial security of the public.

As for the donations, I would prefer this money be given to any number of under funded great causes where alternative funding is not so readily available.

Last comments for clarity. None of this post is meant to criticise any individual, nor am I deliberately promoting one insurers product over another. I myself do not buy my insurance online but use the services of an insurance broker.

This is one of those posts where it is easy to offend so many people and come across as a heartless and uncaring. I look forward to the comments, both negative and hopefully a few in support.

Tomorrow I will be back on the less contentious ground of the lack of building standards when constructing with foam panels.

Source ABC News

Source ABC News

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