Bushfires and Home Insurance
Does house insurance cover bushfires? It definitely can, find out what you need to do.
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As bushfires continue to burn across Australia, thousands of properties have been destroyed this summer season. If your home has been damaged, your home and contents insurance policy may offer bushfire cover as long as you've taken out the insurance 48-72 hours prior. The level of coverage you'll receive may vary depending on factors including where you live and the value of your home.
If you need to make a home insurance claim because of the bushfires, you can use this guide to check if you have the right cover, learn how to make a claim and find a list of helpful resources.
We will be updating this guide as we get more information. Please see below for more in-depth coverage.
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How can this page help me?
What kind of cover do I need for bushfires?
You can get bushfire cover with home and contents insurance, though some insurers have different definitions of what they'll cover. Most should include bushfires under fire cover e.g loss or damage to your home and contents caused by fire, including bushfires and grass fires. Be sure to read the product disclosure statement (PDS) to make sure that bushfire is specifically covered. It's worth noting you will probably need car insurance if you also want to protect your vehicle.
The amount of cover you need depends on a number of factors, including the value of your home and how much it will cost to completely rebuild. With this kind of thing, you always want to make sure that you're covered in the event that your home is completely destroyed. There's no use undervaluing to get a cheaper premium because it will just cause you grief if the worst should happen.
Get someone to come in physically to your home and value for it's rebuild value. This is different to what you might value your place if you were to put it up for sale. It's how much it would cost you to rebuild your physical home, including labour costs, and excluding land value.
If your home is completely destroyed by bushfire, there's a good chance you will need to rebuild it to a higher standard in order to meet regulations around bushfire risks. This is because after the Black Saturday bushfires wreaked havoc on Victoria in 2010, the government made changes to the national building code in an effort to make homes safer. All new homes built in an at-risk bushfire zone must now follow specific design requirements based on the area's Bushfire Attack Level (BAL) rating.
As a result, you are probably best opting for total replacement cover. This ensures your home is rebuilt completely if it's destroyed so you don't run the risk of being underinsured. Alternatively, you could add a buffer to your 'sum insured' policy if you think you can accurately estimate how much it would cost to replace your home with the new guidelines.
When is it too late to take out a policy for bushfires?
Most home insurance policies will cover you for bushfires as long as you've taken out cover 48-72 hours prior. However, as soon as a bushfire becomes a known event, you might not be covered. Because there isn't a specific bushfire warning distance or level where you are no longer covered, your best bet is to take a policy out as early as possible. That way, you avoid this grey area.
Most insurers will place an embargo on anyone who takes out a policy in an area that is affected by bushfires. Alternatively, they will have a no-claim period on claims related to bushfires.
Luckily you don't have to worry about being disqualified from cover based on where you live. Insurers won't usually deny you cover for living in a bushfire-prone area, though they will take this into consideration when calculating your insurance premium.
What does bushfire insurance cover?
Bushfire insurance will let you cover your home and all of your contents depending on whether you choose building insurance, contents insurance or both.
Here's how each of these will protect you:
This protects the physical building plus anything permanently attached to it like cupboards and carpets. If a bushfire damages or destroys any of these, it will usually pay for the following:
- Repairing or replacing your home
- Putting you up in temporary accommodation
- Demolishing the old house and/or removing rubble
- Paying regulatory fees for the new building construction
- Paying for professional services such as surveying and architecture
This covers the personal belongings you keep in your home, like your furniture and electronics. If a bushfire damages or destroys any of these, it will usually pay for the following:
- Repairing or replacing anything that is damaged or destroyed
- Removing and tossing the damaged items
- Storing the undamaged stuff elsewhere if it can't stay in the home
How much does bushfire insurance cost?
The cost of bushfire insurance can differ from person to person, home to home and neighbourhood to neighbourhood. Insurers will collect your personal details before calculating your premium and use the following information to come up with the final cost:
- Where you live. People who live in bushfire-prone areas will generally pay more than people who don't, all else being equal.
- The value of your home. The more it will cost to replace your home, the more you will pay for your insurance.
- Whether you also insure your belongings. You have the choice to insure the building, the stuff inside or both. Insuring both will generally cost you more.
- Whether you choose optional cover. Many insurers offer additional cover for an additional charge. For example, you can pay extra for "safety net" cover, which will pay you more than the value of your house if a surge in building costs make it more expensive than normal to repair or replace.
- Your claims history. Generally speaking, people who claim more will pay more for their insurance.
- Your level of excess. This is the out-of-pocket expense you agree to pay for every claim. You can usually agree to pay a higher excess in exchange for a lower premium.
- Any discounts you have. Many insurers will offer discounts especially if you hold multiple policies with them (for example, car insurance plus home & contents).
What if I live in a bushfire-prone area?
It’s stressful enough worrying about a bushfire that could potentially sweep through your neighbourhood. Luckily you don’t have to worry about being disqualified from cover based on where you live.
Insurers won’t usually deny you cover for living in a bushfire-prone area, but they will take this into consideration when calculating your insurance premium. Homes in bushfire-prone areas pose a bigger fire risk to insurers than homes that are not and this will have an upward effect on your overall cost. However, it’s possible that your house is less risky in other ways. For example, if you live in a rural area, your home might be less prone than urban homes to theft and vandalism.
How to avoid being underinsured for bushfires
Imagine how devastating it would be to think you were fully covered, only to find out your claim only covers part of your rebuilding costs. This is called underinsurance, and one way to avoid it is to factor in the national building code regulations mentioned above. Other ways include:
- Keeping up with your home’s increase in value. Your insurance cover doesn’t automatically increase every time your home goes up in value. That’s why it is important to review your policy every year and adjust your cover amount accordingly. You’ll also want to adjust your contents cover if you’ve purchased new items.
- Having a safety net or complete replacement policy. In a perfect world, the amount it would cost you to replace your home would be equal to the home’s current value. But in the real world, the market can be unpredictable. For instance, if a bushfire took out your whole neighborhood, the cost of local building supplies would most likely surge temporarily. A safety net or a complete cover policy would factor this in.
- Not cutting corners to save on your premiums. It may be tempting to insure your home for less than what it is worth to save money on your premiums, but this can spell disaster. Imagine losing it all and then finding out you can only afford half of what it costs to rebuild.
It doesn’t pay to be underinsured, so make sure you are covered for at least the full value of your home and have enough contents insurance to replace your essential belongings.
What won’t bushfire insurance cover me for?
There are a few other situations where you won’t be covered. These are called exclusions and it’s important that you become familiar with them. Here are some of the most common:
- The bushfire occurred during your waiting period. You are not covered for bushfire at all within the first 48-72 hours of having your policy. However, the waiting period will usually be waived if you are transferring over from an equivalent policy from another insurer.
- There was no flame. If there was no flame, there was no fire. That means you won’t be covered for scorching, burn marks or melting unless there was a flame present.
- The fire missed your home. You won’t be covered for smoke or soot damage from a nearby bushfire if the flame didn’t touch your home. Some insurers will make an exception if the bushfire reached another building within a certain distance of your home.
How do you make a claim after bushfire damage?
The Insurance Council of Australia recommends you do the following in the event of a claim:
- Return to your property only when you have been told it is safe
- Don't worry if you cannot find your insurance documents. Insurers keep electronic records. Call 1800 734 621 if you can't remember which insurer you're with
- Take photographs and video of your property to help the assessor with your claim
- Speak to your insurer before you attempt or authorise any building work, including emergency repairs, and ask for the insurer's permission in writing. Unauthorised work may not be covered by your policy
- If your home is unsafe, notify your local authorities and check with your insurance company whether you can claim temporary housing expenses
- You can remove and discard any damaged goods that pose a health risk, such as carpets or soft furnishings, but take photos and keep samples of materials and fabrics to show the assessor
- Keep any items that could be repaired, and if in doubt speak to your insurer
- Primary producers are reminded that they may euthanise critically injured animals without having been visited by an assessor. They should ensure they have appropriate records for any insurance claim
What if your claim is rejected?
A rejected claim can sting to say the least, but luckily there is a rather generous appeals process. Here’s what you need to do to keep your claim alive:
- Request an internal review. Insurers are required by law to have an internal review team that is separate to the original claims department. Their job is to review denied claims to make sure there’s nothing the claims department missed.
- Escalate your claim to the Australian Financial Complaints Authority (AFCA). If the insurer’s internal review team still denies your claim, you can lodge a complaint with the Australian Financial Complaints Authority (AFCA)
- Lawyer up. If the Australian Financial Complaints Authority (AFCA) rules in favor of the insurance company, there’s nothing stopping you from taking the insurer to court. For free legal advice, you can contact the Legal Aid office in your state or the Insurance Law Service at www.insurancelaw.org.au or 1300 663 464.
Every state and territory has its own bushfire information services:
Compare or review your current bushfire cover with these home insurers
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