Accommodation Insurance and the Rising Cost of Extreme Weather

Accommodation insurance is becoming increasingly complex as Australia faces more frequent and severe extreme weather events. From cyclones and flooding to bushfires and coastal erosion, climate-driven risks are reshaping how accommodation providers manage exposure, resilience and long-term affordability.

A recent report from the Early Warning Network, drawing on Zurich’s Mandala Climate Risk Index, highlights that around half of Australia’s tourism-related assets are now exposed to significant weather risk. Queensland in particular was identified as highly vulnerable due to its concentration of coastal and nature-based tourism regions.

Further industry analysis reported by Insurance News suggests climate risk now threatens approximately $170 billion of tourism-related assets nationwide.

For accommodation operators, these trends carry important implications for risk exposure, operating costs and insurance structure.

How Extreme Weather Is Increasing Risk for Accommodation Providers

Severe weather affects accommodation businesses in two primary ways: direct property damage and indirect business interruption.

Property losses may include:

• Roof and structural damage from cyclones or storms

• Flood damage to buildings and contents

• Bushfire impact or smoke contamination

• Coastal erosion affecting foundations

Even where properties avoid direct damage, financial consequences can still be significant.

Operators in disaster-affected regions often face:

• Cancelled bookings

• Road or airport closures

• Reduced tourism confidence

• Power, water or communications outages

• Temporary shutdowns for safety reasons

Research referenced in the Early Warning Network report notes that tourism businesses in affected regions may experience revenue reductions of around 35% on average.

As claim volumes rise, insurers are responding with higher premiums, tighter underwriting and, in some locations, reduced availability for higher-risk properties. This is directly influencing accommodation insurance conditions across vulnerable regions.

What This Means for Accommodation Insurance Coverage

Accommodation providers are typically considered higher-exposure risks, particularly in coastal, regional or bushfire-prone areas. Insurers are therefore placing increased emphasis on:

• Accurate building and contents valuations

• Flood and storm exposure assessments

• Construction standards and maintenance records

• Business interruption calculations

• Emergency response and mitigation planning

Understanding policy definitions is critical. For example:

• The distinction between flood and stormwater damage

• When prevention of access extensions apply

• Whether utility outage cover is included

• How indemnity periods operate

The structure of accommodation insurance can determine whether a business recovers efficiently or faces prolonged financial strain after a major weather event.

Why Proactive Weather Intelligence Supports Better Insurance Outcomes

The Early Warning Network emphasises proactive weather monitoring as a practical risk mitigation tool. Real-time alerts allow operators to:

• Secure property before severe weather

• Notify guests early

• Implement evacuation procedures

• Reduce loss severity

• Improve documentation for claims

Insurers increasingly view active risk management as a positive underwriting factor. Documented emergency plans, maintenance schedules and weather intelligence systems can strengthen your overall insurance profile over time.

How to Strengthen Your Accommodation Insurance Position

Extreme weather cannot be prevented, but its financial impact can be managed more effectively.

Review your accommodation insurance regularly

Operations evolve. Renovations, asset upgrades and occupancy changes should be reflected in your cover structure. Annual reviews help ensure your policy aligns with current exposures.

Update property valuations

Construction and repair costs have risen significantly. Accurate sums insured reduce the risk of underinsurance penalties at claim time.

Maintain a documented weather response plan

Your plan should outline:

• Severe storm procedures

• Guest communication protocols

• Evacuation processes

• Staff responsibilities

• Property shutdown steps

Clear documentation supports operational resilience and strengthens discussions with insurers.

Improve property resilience

Routine maintenance, improved drainage, debris clearing and structural reinforcement reduce potential loss severity.

Use real-time weather intelligence tools

Weather monitoring systems allow operators to act early, potentially reducing damage and supporting smoother claim outcomes.

Supporting the Future of Australia’s Accommodation Industry

Climate trends are reshaping the operating environment for accommodation providers. The relationship between extreme weather and accommodation insurance is becoming more complex, with greater scrutiny on exposure, mitigation and long-term insurability.

Understanding how climate risk influences insurance premiums, policy structure and availability is essential for long-term sustainability.

At Barrack Broking, we work closely with accommodation clients to assess exposures, structure tailored accommodation insurance solutions and support proactive risk management. A well-prepared approach today can make a meaningful difference in protecting your property, your guests and the future of your business.

To understand how your accommodation insurance responds to weather-related disruption, speak with our team for a structured policy review.