Fire Insurance

What is fire insurance?

Fire insurance is included in most home and contents insurance policies. It can pay to repair or replace your home and your belongings if they are damaged by fire. It can also cover you for temporary accommodation if you can't stay in your damaged house.

Keep in mind, for a fire to have occurred, there needs to be a flame present. Insurers don't generally cover other heat-related problems like scorching or melting.

What about bushfires?

Fire insurance also includes bushfires. However, you generally need to have held the home insurance policy for longer than 72 hours to be covered for bushfires.

What does your policy cover you for?

Fire insurance generally covers you for loss or damage caused by:

• Fire
• Bushfires and grass fires
• Smoke

Here's how different parts of a home insurance policy can help if your property is affected by fire.

How to lodge a claim after a fire

When you are ready to claim after a fire, here's 4 things you need to do:

1. Contact your insurer. Let them know ASAP so that they can assess the damage.
2. Gather evidence. Take photos of the damage, get the police report and make a list of what you lost in the fire. Try to locate proof of ownership of the items you lost.
3. Lodge your claim. Fill this out on the insurer's website and send it back to them along with the evidence you've gathered.
4. Wait for the results. If your claim is accepted, your insurer will pay to repair or replace whatever is covered by your policy. If your claim is denied, you have the right to several rounds of appeals, first through the insurer's internal disputes department and then through the Australian Financial Complaints Authority (AFCA).

What fire insurance doesn't cover

Here are some reasons an insurer could deny your claim:

• A bushfire occurs within 48–72 hours of you buying your policy (the argument is that you could have bought your insurance only after you found out your home was in the path of an existing fire).
• Damage from ash, soot or smoke caused by a fire away from your home (you'll only be covered for ash, soot and smoke if the fire damaged your house).
• Your house didn't comply with fire regulations (for example, you have a wood heater that was not installed according to regulations).
• The fire was intentional.
• It was caused by negligence.
• There was no flame.

How much fire insurance do you need?

This depends on the value of your house and the contents inside it. When you take out a policy, you'll generally need to work out how much it would cost to replace or rebuild everything you own. In insurance terms, this is known as your 'nominated sum insured'.

It's especially important to do this if you live in a bushfire prone area because it will prevent you from being underinsured. For example, if your home is insured for $1 million but it's really worth $2 million, you'd be out of pocket $1 million if a fire completely destroyed it.

There are two ways you can avoid doing this (you'll find them included in many home insurance policies):

• Total replacement cover. This covers all costs if your home is completely destroyed by a fire or bushfire.
• Sum insured safeguard. If the amount you insure your home for isn't enough to repair or replace everything if a fire or bushfire destroys it, this safeguard increases it by up to a certain amount (usually around 25%).

Here's the bottom line

While most people are generally safe from fires and bushfires, it's not a given. Anyone can fall victim to a malfunctioning toaster or rogue candle. The damage can be financially crippling which is why getting covered by home insurance is so important.

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