Bushfire insurance is a standard feature in most home insurance policies and it will help you rebuild when mother nature takes its toll.
Bushfires are a fact of life in Australia, but losing everything to one doesn’t have to be. You’ll be glad to know that most home insurance policies will cover you for bushfires as long as you buy it well enough in advance.
You can get protection for the building itself and all of the belongings. It can also cover any unexpected expenses such as a temporary surge in construction costs, which is common when everyone is rebuilding at the same time.
Get covered for bushfires with these policies
Finding cover for bushfires
Are you covered for bushfires?
If you have home insurance, you are most likely covered for all types of fires including bushfires. While insurers treat bushfires largely the same as other types of fires (such as a house fire), you will see a few separate terms and conditions such as the following:
- There will be a waiting period for bushfire claims. You’ll usually have to wait 48-72 hours after taking out your policy before you can make a bushfire claim. This keeps people from insuring their house only after hearing about an approaching bushfire. This waiting period doesn’t apply to other types of fires.
- You may not be covered for smoke damage. Most insurers won’t cover you for smoke damage from a nearby fire if the flames didn’t touch your house. Some insurers will make an exception if the fire came from a nearby building. That means smoke damage from a bushfire will most likely not be covered.
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.
What does bushfire insurance cover?
If you think about your home, you probably think about the building as well as the stuff inside that makes it feel like a home. Bushfire insurance will let you cover all of it 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 - but it’s probably safe to say it won’t cost you as much as it would cost to rebuild your entire home!
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).
Does bushfire insurance cover cars?
Unfortunately bushfire insurance won’t cover your car, even if it is kept in a garage. But you can take out car insurance that will cover you against bushfires. Look for either a third-party fire and theft or comprehensive car insurance policy.
How does the Australian national building code treat homes in bushfire zones?
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.
Homes built before the new regulations were implemented are not required to follow these design requirements. But it is important to keep in mind that if your home is destroyed and you have to rebuild, you’ll be required to follow the new guidelines.
This means you will probably need to insure your home for more than what it is currently worth to account for any additional costs.
There are three ways to do this:
- Add a buffer to your “sum insured” policy. A sum-insured policy is one where you are covered for a specific amount. If you think you can accurately estimate how much it would cost to replace your home, even with the new guidelines, you can insure your home for that exact amount. Keep in mind that if you underestimate the cost, you will have to make up the difference yourself.
- Buy a “complete replacement” policy. This will replace your home at whatever cost it takes to rebuild. This will cover you for any temporary price surge in building materials, all new design regulations and any other unexpected costs. The policies usually cost more.
- Buy a policy with a “safety net.” This is a sort of middle ground between the other two options. It will cover you for any unexpected cost increases, but only up to a certain amount - usually 25-30% about your sum insured. You may have to pay extra on your premium for this, although some insurers will include it for free on comprehensive policies.
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?
Getting yourself and your family to safety is your first priority, so don’t worry about your insurance until you’re out of harm’s way. After that, you need to take the following steps if you plan on making a claim:
- Contact the insurer. Your insurer will want to review the damage before they authorise repairs, although they may let you make small emergency repairs sight-unseen. Take this opportunity to ask them for any cash you’ll need to cover urgent expenses like temporary accommodation.
- Gather evidence. The more information you can give your insurer, the better. List everything you lost in the fire and take photos of the damage. If possible, gather old receipts or anything else that shows that you owned the items you are claiming for. You’ll most likely be covered for any out-of-pocket expenses as a result of the fire, so keep all those receipts too.
- Submit your claim. Ask your insurer to send you a claim form or download one off their website. After you fill this out, post it or email it back to the insurer along with all the evidence you gathered from step two.
- Wait for the insurer to assess your claim. Your insurer will send an assessor out to review the damage and start organising repairs. They will be trying to keep your claim amount to a minimum, so make sure to remind them of any losses you think they may be overlooking. This can be a very stressful time but do make sure you remain helpful and cooperative.
- Wait for the decision. If your insurer approves the claim, they will repair or replace whatever your policy covers. If they deny it, you can appeal the decision several times. The insurer’s internal disputes department handles the first appeal, and if that doesn’t go your way, you can appeal through the Financial Ombudsman Service (FOS).
- Start rebuilding. If you’re approved, the insurer will repair or replace your home with builders of their choice. You’ll get a check for the value of your belongings if you also had contents insurance.
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 financial ombudsman. If the insurer’s internal review team still denies your claim, you can lodge a complaint with the Financial Ombudsman Service of Australia.
- Lawyer up. If the financial ombudsman 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.
The basics of bushfires
What is a bushfire?
For insurance purposes, the definition of a bushfire is an uncontrolled, non-structural fire burning in a grass, scrub, bush or forested area. Its severity is determined by factors such as fuel load, wind strength, temperature and humidity and it can be classified as "catastrophic" when these factors are at their most extreme.
Its severity is determined by factors such as fuel load, wind strength, temperature and humidity and it can be classified as "catastrophic" when these factors are at their most extreme.
How do bushfires start?
A bushfire can start in a number of ways including:
- Lightning strike. Dry lightning (where no rain is present) is a major cause of bushfires in Australia.
- Accidental human intervention. Sparks from agricultural machinery, discarded cigarette butts, unattended campfires and poorly controlled burn-off programs can all cause bushfires.
- Deliberate human intervention. Arsonists are responsible for a number of bushfires every year, wantonly putting property, livestock and human lives at risk.
Once a bushfire has started, there are several factors that determine its growth and the speed at which it spreads:
- Fuel load. The greater the fuel load, the hotter and more intense the fire will be. Dense undergrowth that has not been regularly burnt off and the oil from eucalypt trees can both promote the growth of a bushfire.
- Fuel moisture. Dry fuel will burn rapidly, so the amount of time since rain fell can be a determining factor in bushfire growth.
- Wind speed. Strong wind provides a constant supply of oxygen to a bushfire and can promote its rapid spread by “spotting”, blowing burning embers ahead of the fire front to start new fires.
- Ambient temperature. The higher the temperature, the more likely a bushfire will continue burning, as the fuel is much closer to the ignition point.
- Relative humidity. The drier the air, the more flammable the vegetation and the greater the intensity of the bushfire.
- Terrain. Fires accelerate when travelling uphill and decelerate downhill, so the steepness of the terrain plays an important part in the speed of bushfire spread.
How can I prevent a bushfire?
Prevention is always better than cure, so reducing the risk to your home from bushfire through hazard reduction is as important as having adequate insurance in place. Preparations over the long term can include:
- Controlled burning. This is carried out by volunteers and property owners on days when winds are light and undergrowth is still relatively damp. Permits must be obtained and great care taken, as controlled burning can easily get out of control and cause the very disaster they are trying to prevent.
- Property maintenance. This involves regular tasks such as keeping undergrowth down through slashing and mowing, removing overhanging trees and vegetation from buildings and storing fuel and combustibles well away from the home in sheds or outbuildings.
- Home maintenance. Many homes are lost in bushfires as a result of embers landing on roofs and gutters. You can make your home more fireproof by keeping gutters free of leaves and sealing any gaps in your home’s exterior where sparks and embers could lodge.
- Equipment maintenance. If your property is semi-rural, you should have suitable fire-fighting equipment such as a pump and long hoses. These should be kept in good working order and water sources such as dams and swimming pools kept filled and ready for use.
Where do bushfires occur?
While most of Australia is hot and dry, different regions become more bushfire prone at different times of the year.
- Northern Australia. The fire season occurs in winter and spring, when the grasses are dead, fuel has dried out and intense high-pressure systems over South Australia produce strong south-east to north-east winds.
- Australia’s East Coast. The fire season here is spring to mid-summer after the dry winter/spring period and before the summer rains. This is when deep low-pressure systems near Tasmania can create strong, hot and dry, north-westerly winds.
- South-Western Australia. Heat troughs from the Pilbara and hot air from the interior increase the fire danger here in late spring, summer and early autumn, when fuel has dried out after the winter rains.
- South-Eastern Australia. Summer and autumn are the most dangerous times, when the vegetation is dry and hot north-westerly winds occur.
Protecting yourself against bushfires
Why do I need a bushfire survival plan?
A bushfire survival plan is a set of instructions you and your family have created to deal with every aspect of a bushfire. It should be a plan that the entire family has contributed to and in which everyone knows their individual roles and responsibilities.
The first part of your plan should be a decision on whether you are going to leave early or stay and defend your home and the information your plan contains will depend on this decision.
If you plan to leave early before the fire, your plan should include:
- When you will leave?
- What you will take with you?
- Who will be responsible for bringing it?
- Where you will go?
- Who you will inform about your movements?
- What preparations you will make to protect your home before you leave?
If you plan to stay and defend your home, your plan should include:
- Immediate preparations before the fire
- Know where you will shelter in your home
- List what your emergency kit will contain
- Care and supervision of children and pets
- The procedures you will follow once the fire front has passed
In both cases, you should have a backup plan in case something goes wrong (i.e. an alternative vehicle if your car won’t start or an alternative water source if you lose water pressure).
What should I be doing before a bushfire?
While long-term hazard reduction can help to reduce the impact of a bushfire, short-term preparations in the face of an approaching fire can often make the difference between saving or losing your home (and possibly your life).
If there is a bushfire heading for your property, you should immediately activate your Bushfire Survival Plan. This is a plan that you and your family have already worked out to deal with every aspect of a bushfire, both before, during and after.
Pre-bushfire actions might include:
- Securing pets and livestock in a relatively safe place with plenty of shelter and water
- Turning off all unused appliances in the interim and turning gas and power off altogether in a fire to prevent explosions and electrocution
- Hosing down roofs and gutters to discourage burning embers
- Parking vehicles undercover in garages and sheds
- Closing all doors and windows
- Keeping the radio on to stay abreast of developments
What should I do after a bushfire?
It’s important to remember that the previous steps should only be taken if you have the time and are intending to stay and defend your home. If you are not planning to stay, then you must leave as early as possible, as many fatalities result from people making last-minute decisions and being overwhelmed by fire while fleeing in their vehicles.
If you remain with your home and the bushfire front has passed, the first thing to do is to go outside and check for spot fires and extinguish them immediately. Many homes survive the fire front, only to be lost hours later due to uncontrolled spot fires, so be sure to remain vigilant.
If you are returning to your home after being evacuated, be on the lookout for fallen power lines, leaking gas or sewerage, downed trees and dangerous debris left in the wake of the fire. Also be cautious when entering your home and if there are signs of major structural damage, refrain from entering and call relevant authorities and your insurance company.
Some other safety tips you should consider:
The following additional bushfire safety tips are also worth bearing in mind:
- Never stand on your roof to water it down, as more injuries are incurred from falling off roofs than from burns.
- Ensure that LPG cylinders around your home are installed with the pressure relief valves facing outwards, so that if they catch fire the flame isn’t directed towards the house.
- If your house catches fire and you are forced to leave, move everyone to an area that has already been burnt.
- Wear protective clothing and smoke protection when outside and drink plenty of water to prevent dehydration.
- Block downpipes with a sock full of sand and fill gutters with water.
- Block gaps under doors with wet towels or blankets.
- Fill the bath and collect water in buckets to put out spot fires.
- Obey any directive to evacuate, as human life is more important than property.
Every state and territory has its own bushfire information services:
New South Wales: www.rfs.nsw.gov.au
Australian Capital Territory: www.esa.act.gov.au
South Australia: www.cfs.sa.gov.au
Western Australia: www.dfes.wa.gov.au
Northern Territory: www.pfes.nt.gov.au