Am I covered for bushfires with my regular home and contents insurance?

Most insurers should cover your home and contents for bushfires under the fire umbrella, but it's important to read the product disclosure statement to ensure that bushfires are included in your policy.

You need to think carefully about the amount of cover you need as this will depend on several factors, such as your home's value and how much it'll cost to rebuild. It's always better to be a little bit over-covered here, just in case your home is burned to the ground. Never be tempted to switch to a cheaper premium, because you could be left short.

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It's a good idea to have your property valued - both its present value and how much it would cost to rebuild. The rebuild value is different from the sale value and as it doesn't include the land value, it's usually less.

Rebuilding after a bushfire involves improving as well

If you're rebuilding after a bushfire, you'll need to rebuild to a higher standard so that the new dwelling meets the newer bushfire regulations. These regulations were brought in after the terrible 2010 bushfires in Victoria. If you're in an at-risk area, you'll need certain design features according to the zone's Bushfire Attack Level (BAL) rating.

These new regulations might cost a little more when it comes to the rebuild, so make sure your valuation factors them in. Even then, there's nothing wrong with opting for a little extra cover to act as a buffer and offer you peace of mind.

Can you be too late for bushfire cover?

Most insurers require you to have the cover for at least 48-72 hours before the fire is known about. If it's obvious your area is going to be hit, you might be too late to add or take out bushfire cover. As ever with insurance, you're better off taking it out as soon as possible to avoid any confusion or exclusion periods.

Most insurance providers won't offer cover to someone taking out cover while their area is affected by bushfires and there may be a no-claims period after you buy the insurance.

You'll never be disqualified from taking out insurance because of the place you live, but insurers will take your address into consideration when they calculate your premiums.

What's covered by bushfire insurance?

Bushfire insurance covers both your buildings and your contents - or possessions.

Your buildings insurance covers the physical buildings and any fixtures within it, such as cupboards and carpets.
It also covers the cost of repairing or rebuilding the property, putting you into temporary accommodation, demolishing the old property, the regulatory fees for the new building, as well as surveys and architecture costs.

Contents insurance covers you for the loss or damage of possessions like electronics, furniture, appliances, as well as removing the damaged or destroyed objects and storing any undamaged possessions while the rebuild is carried out.

How much does bushfire cover cost?

The cost of your cover will vary according to your area, the size of your property, what you have in the property and so on. The bottom line is, however, than people in bushfire-prone areas will pay more. Your premiums will probably rise slightly if you add on "safety net" cover to buffer you against rises in construction costs.

There's also your level of excess. If you choose a low excess, your premiums will be higher, and vice versa. You can imagine that it's best to just pay the extra premiums and have hardly any out-of-pocket expenses.

If you have several products with your insurer, such as car insurance, then you may get discounts on your premiums, so it's always worth bundling if you can.

How to ensure you have enough cover

It's important to make sure you have enough cover by factoring in all the new building codes, but there are other ways to avoid being under-insured.

Get your property revalued every year. Your insurance policy won't adjust for increases in your home's value, so make sure you know how much its market value is and adjust your policy accordingly. Similarly, if you upgrade your furniture, kitchen or you have new and expensive IT equipment, add it to your policy.

Build in a safety net for rebuilding. If everyone in your neighbourhood is rebuilding then there may be steep rises in the cost of supplies and services. A few extra thousands in the pay-out will help here.

Never cut corners with your insurance. While you might like the savings each month, you won't like having to make up the shortfall after disaster has struck.

What are some common fire insurance exclusions?

There are some situations under which you won't be covered.

If the fire happened within 48 to 72 hours after you bought the policy. This exclusion will probably be waived if you're transferring to another provider rather than taking out new insurance.

Scorching, melting and smoke damage won't be covered. You need actual flames in and around your building. If the fire misses your property, you won't be covered, although some insurers will pay out of the fire comes within a set distance of your home.

Which is the best home and contents for fire?

Of course, this answer depends on your exact circumstances compare your policies and see if you can save here, but two good policies are Real Top Home and Contents insurance, which has a short cooling-off period of 14 days as well as a discount bundle.

There's also Budget Direct Gold Home and Contents insurance, which offers under-insurance protection and new for old replacement of contents.

This update is not financial advice. This article is general news and information.

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