Storms, floods & fires

Natural disasters and your home insurance

Having your home damaged or destroyed in a natural disaster is devastating. Here are some tips that may help you find out if your home is in a natural disaster prone area, and work out if you have adequate insurance cover for many types of natural disasters.

Get adequate insurance for natural disasters

There have been many serious floods, fires, cyclones and storms in Australia over the last decade and many people have found out too late that they did not have enough insurance cover on their home and contents. This can be extremely costly and stressful, if you lose your home.

Wherever you live, your home and contents insurance cover should be enough to cover the cost of rebuilding your home and replacing your contents.

It is estimated that 13% of homes that required reconstruction or significant repair after the 2009 Victorian bushfires were not insured. See the Royal Commission's report on the Victorian bushfires and ASIC's reports on Getting home insurance right: A report on home building underinsurance and Making home insurance better.

Increasing your insurance cover may not cost very much, and if you shop around you may even be able to get more cover for a lower price. 

Find out if you live in a disaster-prone area

To find out if you are in a natural disaster-prone area, you can contact your:

You can ask them about flood mapping and the Bushfire Attack Level (BAL) of your home to get a better understanding of your risk of flood and bushfires.

You can also ask your council whether your house has been built to natural disaster standards (e.g. cyclone standard).

Video: Preparing for the bushfire season

Video about preparing for bushfire season

Have you prepared for the bushfire season? This video from the Know Risk website provides some tips on how to keep your home and family safe during the summer months.

Check if your insurance covers you for natural disasters

If you live in an area prone to natural disasters, adequate home and contents insurance is essential.

Your insurance policy will state what disasters you are covered for. Review your policy carefully. Some people have found out after a natural disaster that the event was not covered by their policy and they have had to pay repair or replacement costs themselves.

Flood cover

Flood cover is not included in all home and contents insurance policies, so if you require flood cover, check whether your policy provides it and confirm exactly how much cover is offered. Even where flood cover is offered, loss or damage to some parts of your property may not be covered (for example, retaining walls, gravel driveways, pontoons, jetties or bridges) so check your policy carefully.

Check exclusions for storms, cyclones, floods and bushfires

If you have home and contents insurance, check whether you are covered for natural disasters such as storms, cyclones, floods, bushfires and flash floods. Make sure you understand what is covered, and any exclusions and conditions that apply. You can ask your insurer questions if you are unsure.

If you are not happy with your current level of cover, talk to your insurer about what they can offer. You can also speak to other insurers to see if you can find a policy that's better suited to your needs. Always ask potential insurers lots of questions.

Check if you have enough insurance cover to rebuild

If you don't have the right amount of cover to rebuild your home after an event, you are underinsured.

Consider a total replacement policy

If you choose a total replacement policy, you are less likely to be underinsured. With this type of policy, the insurer can agree to repair or rebuild the home to the same size and standard as the current home.

Consider a sum-insured policy with a 'safety net'

Some sum-insured policies provide a 'safety net' on top of the amount you are insured for. This means if the costs to repair, rebuild or replace your home and contents are more than the sum-insured amount, you may be entitled to extra cover up to the limit of the safety net.

Make sure you read the terms and conditions that apply to this type of policy carefully as cover can differ.

Some insurers have calculators on their websites that may help you work out the sum-insured amount for your home and contents. We suggest you use at least three calculators from different insurers to compare sum-insured policies because the results can differ.

The Insure it, it's worth it guide from Good Shepherd Microfinance can help you estimate the value of your belongings to get the right level of contents insurance. 

Case study: Johnny has a sum-insured policy with a 'safety net'

Mature Asian ManJohnny's house was insured for $500,000 when it was destroyed by a bushfire.

Johnny had to rebuild, and the new house had to meet current building codes to better protect it from bushfires. This would cost more than the market value of the old house.

Because of higher building costs, it will cost Johnny $600,000 to rebuild, which is more than the sum-insured on his policy.

Johnny's policy provides a safety net of up to 25% of the sum-insured, so rebuild costs of up to $625,000 will be covered. Johnny is relieved that the building costs will be covered by his insurance. 

Home insurance advice for North Queensland residents

The Australian Government has a website to help North Queensland residents compare home insurance policies. The North Queensland home insurance website lists policy features and indicative premiums based on your suburb or postcode.

What to do after a natural disaster

For steps and help to manage after a disaster, see what to do after a natural disaster.

Australia is a great place to live but it is also a harsh environment. Taking some time to do your insurance homework will help ensure maximum protection for your home.

Related links

Last updated: 08 Jan 2020