Banks to remind customers to get adequate home insurance protection Cyclone Yasi devastated towns such as Cardwell and Hinchinbrook - and some residents were doubly devastated when they were told they were underinsured. Picture: Tom Lee Source: News Limited ANNUAL reminders will be issued to millions of Australian home loan customers urging them to check up on their insurance obligations and stamp out the risk of people leaving their properties uncovered. From February 1 the nation's new banking code - the industry's charter on banking practice standards - will for the first time enforce lending institutions to contact their mortgage customers and reinforce their obligations to hold home insurance. They will also explain the risks of underinsurance. While a majority of home loan customers - both owner occupiers and investors - have insurance, Australian Bureau of Statistics data found there was still four per cent of property owners not insured. The nation's banks hold more than 5.5 million home loans worth $1.2 trillion and two-thirds of are owner occupiers and one-third are investors. Steven Munchenberg, chief executive of The Australian Bankers" Association. The Australian Bankers' Association's chief executive, Steven Munchenberg, said the obligation on banks to ensure their mortgage customers were insured would help stamp out any chance of customers not being properly covered. "Following disasters like Cyclone Yasi we agreed with the Government that we would remind people with a mortgage that are supposed to have adequate insurance to cover their home," he said. People are obliged as part of their mortgage to have insurance because their home is security for their loan, the bank will check that when you first take out your mortgage but what happens after that gets complicated. What do we do if you don't renew your insurance ... we can't terminate your mortgage because you haven't kept up your insurance. An Insurance Council of Australia's spokeswoman said it was critical home loan customers kept on top of their insurance. "It is prudent for individuals to seek adequate insurance protection for their assets, especially those that they have borrowed to purchase," the spokeswoman said. Equally important is ensuring property owners have the right amount of insurance if the loss of an asset is to be compensated for. Financial Counselling Australia's executive director, Fiona Guthrie, said insurance obligations were critical because "the consequences are so dramatic."