Banks will remind home loan customers of their property insurance obligations following changes to the industry’s code of practice this month.

The annual reminders will encourage mortgage-holders to make enquiries with their insurers about cover, and will include a reference to the Australian Securities and Investments Commission MoneySmart website.

Australian Banking Association CEO Steven Munchenberg says the issue was raised after the Brisbane floods and Cyclone Yasi, but it was difficult to enforce ongoing insurance requirements.

“What we agreed was the most useful thing we could do was remind mortgage-holders each year that they are supposed to have that, and we decided to enshrine it in our code so it was more transparent,” he told insuranceNEWS.com.au.

The Insurance Council of Australia (ICA) says any measure that reminds property-owners to renew insurance is welcome.

Australian Bureau of Statistics household expenditure data indicates only 4% of homes are uninsured. But ICA says last year’s Understand Insurance survey shows up to 80% of householders are underinsured.

“An annual reminder from a mortgage provider to renew insurance may help individuals to review their level of cover and ensure the amount of insurance they are purchasing will be adequate to meet their liabilities or rebuild the property in a worst-case scenario,” an ICA spokesman said.