Key takeaways
- Bushfire insurance can pay to repair or rebuild your home if it is damaged by a bushfire – up to your sum insured.
- You will not be covered for bushfires if you took out a policy in the last 72 hours.
- To get the most out of your insurance, there's a few things to keep in mind when you purchase cover.
What is bushfire insurance?
'Bushfire insurance' is not an insurance product on its own. Rather, home insurance policies exist and they can provide cover for bushfires.
All home insurance policies include cover for fire as standard. This includes bushfires or other accidental fires The exact definition of what kinds of fires your insurer covers will be available in your product disclosure statement (PDS).
Typically, you will not be covered for bushfires in the first 72 hours of purchasing your policy. Additionally, damage as the result of scorching or melting will not be covered under 'fire' if there were no flames. See your PDS for a full list of exclusions, terms and conditions.
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What are you covered for with bushfire insurance?
This depends on what kind of policy you’ve purchased. See some examples below.
- Home building insurance. If just your building is insured with home insurance then your building will be covered for damages or loss as the result of fire.
- Contents insurance. If you have contents insurance only and they become damaged by fire, then your belongings will be covered.
- Home and contents insurance. If you have a combined home and contents insurance policy then both your home building as well as your belongings inside will be covered under the policy if they become damaged by fire.
Exactly how you're covered will depend on the specifics of the policy you took out. You can choose to be covered up to a specific sum or for total replacement. In the event of a loss, for example — your house burns down as the result of a bushfire — your insurer will settle your claim based on what you've selected.
What to keep in mind when buying home insurance in bushfire prone areas
If you're in a bushfire prone area, buying home insurance may be difficult. Because of the increased risk, insurers will likely charge you a higher premium, or some may refuse to offer you cover at all.
If you are able to get cover, here's a few things to consider when you're taking out a policy.
- Underinsurance. Underinsurance is a big issue facing Aussies. This is when the sum insured on your home insurance policy isn't enough to cover the cost of repairs or an adequate replacement for your home in the event of a loss. When taking out a home insurance policy, be sure to appropriately calculate the cost of a rebuild. Many insurers have a calculator to help you estimate this amount.
- Total replacement policies. Some insurers offer a total replacement option. This can be preferred over a 'sum insured' option as it ensures your home can be rebuilt as it was, or you can be paid out for the cost to do this. It can be a great way around concerns about accidental underinsurance.
- Contents value. When assessing the value of your home, be sure to consider the value of your contents if you're taking out a combined home and contents insurance policy. Your contents doesn't just mean your TVs and computers. It's also your oven, washing machine, vacuum. These items are expensive and can be costly to forget.
Other insurance to be mindful of for bushfire prone areas
"If you're in a bushfire prone area then you may want to assess more than just your home insurance. If you own a car, then it's worth checking what level of car insurance you have on it. Only a comprehensive or a third party fire & theft policy will cover you in the event of a bushfire."
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