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Australia’s hot, dry climate makes bushfires a real concern in all Australian states and territories. Victoria is one of the most fire-prone areas in the world1, but extreme fire weather can occur anywhere in Australia2.
The Australian bush is known for its bushfires, but fire-prone areas come in many shapes and sizes, including1:
Even when there’s no dense bush near your home, you could still be in a potential fire zone. Each state and territory maps fire-prone areas3, so you can check an area before deciding to buy.
If you do buy in a fire-zone, your home and its contents could be at risk of damage from bushfire. While you can’t avoid this completely4, you can take steps to reduce the risk5. Some of these steps include:
Buying fire insurance won’t prevent damage to your home, but it will help you reduce the significant financial impact of a bushfire.
In Australia, cover against bushfires is usually included in home and/or contents insurance7. You can buy these separately, but it’s common to bundle them together into a home and contents insurance package.
This type of insurance doesn’t just cover you for bushfires - it may also cover you for other natural disasters, like floods and storms7.
Not all home and contents insurances are created equal7, so it’s vital to check exactly what you’re covered for before an insurance event occurs. To give you an idea:
The two types of home insurance are:
1. Total replacement cover
2. Sum-insured cover
Sum-insured cover is the most common and covers you for a pre-selected amount to rebuild your home. Total replacement cover is less common and covers you for the total cost of rebuilding your home to its original standard.
It’s important to estimate rebuilding costs as accurately as possible to make sure your insurance provides suitable cover for you.
There are advantages and disadvantages to both total replacement cover and sum-insured cover7.
|Total Replacement Cover||Sum-insured Cover|
|Reduces the chance that you’re underinsured in the case of a bushfire||Could leave you underinsured in the case of a bushfire|
|May still leave you out of pocket if building standards have changed in your area||Should be checked regularly to make sure your insured amount is relevant to today’s prices|
|Funds to rebuild may take longer to receive because your insurer must do a full assessment first||Funds are usually received quicker because the amount has already been agreed|
|If your home has restricted access after a bushfire, it could delay the funds even more||Some insurers offer a policy extension that gives you up to 30% more in the case of total loss|
Large-scale, devastating bushfires cost $77 million a year in Australia8, according to the Australian Institute of Criminology. This does not include small bushfires, which can still be financially devastating to locals in the community.
For individual property owners, the costs of rebuilding can be significant, so it pays to have the suitable in place. If you’re thinking about bushfire insurance, here are some things to check before deciding on your insurer9:
Answering these questions ahead of time may help you to find the cheapest premium for the insurance that best suits your individual needs.
You should tell your insurer as soon as possible if your home is damaged in a bushfire. Giving them as much detail as possible and answering all questions as accurately as you can will help them process your claim quicker.
Even if you can’t access your home to assess the damage, you can still contact your insurer to get the claims process started.
Every insurer is different when it comes to processing and assessing your claim. However, there are some things to think about in the event of a claim10:
Home insurance covers various events and cover will depend on the specific wording in your policy. If your home is within a fire zone and you’re particularly concerned about bushfires, it’s vital to read policies carefully to see exactly what they cover.
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