Bushfire8 in 10 uninsured for bushfire

With bushfire season starting across much of the nation, landlords and tenants are urged to ensure they are adequately insured.

Drought conditions, unseasonably warm weather,
below-average and above-average rainfall in parts of the nation have heightened the risk of bushfires. The season has started in southern Queensland, northern WA and in the north and west of NSW, and as spring moves into summer many other parts of the country will also brace for fires.

Despite the risk facing much of the country, the Insurance Council of Australia has revealed that it is likely that eight in 10 households are uninsured against bushfires.

Once a bushfire is approaching, it is too late for property owners to take out insurance or update their existing policies – making sure the property and its contents are adequately covered before a disaster strikes is imperative.

Landlords and tenants (contents cover) should ask these questions about their insurance policies:

  • Does the policy actually cover losses stemming from bushfires?
  • Are your most valuable assets adequately protected? Does the sum insured match the value of these assets?
  • For building cover: Is the sum insured based on the current building replacement cost? This value needs to reflect the costs associated with restoring the property to its existing level (including any outbuildings – check if there is cover for a burning building witihn a specified distance of the property), taking into account current building standards and codes, and also factoring in rising costs due to inflation, labour etc. It is particularly important to make sure that costs to restore buildings constructed after 2009, when the national building code was amended to ensure homes are built to better withstand natural disasters, take into account current requirements.
    • A Legal Aid NSW survey of residents who lost homes in the 2013 Blue Mountains fires found buildings were underinsured by $100,000 to $500,000 and contents by $40,000 to $200,000 – lack of awareness of rebuild and replacement costs, along with lack of knowledge about the new building codes, were identified as contributing factors to underinsurance.
  • Do you understand what coverage is provided, as well as any exclusions or limits that may be a part of the policy? For example, most policies do not provide cover for loss or damage where no flame damage has occurred, such as scorching, melting, heat, smoke, ash or soot.
  • Do you understand what your obligations are in respect to the loss mitigation clauses in the policy? These usually include taking all reasonable precautions:
    • for the safety and protection of the building and the site
    • to prevent injury or damage to the building or property
    • to ensure compliance with all statutory obligations, by-laws or regulations imposed by any public authority relating to the safety of persons or property.

In addition to being adequately insured, if the investment property is in a bushfire-prone area it is wise for landlords, PMs and tenants to be prepared:

  • Know the bushfire risks in the area.
  • Speak with the local authority and emergency services about the community’s emergency plans, warning signals, evacuation routes and locations of emergency shelters.
  • Inspect the property and eliminate any potential hazards – your state/territory fire emergency service will have a comprehensive checklist of what should be done, but at a minimum clean out the gutters and roof gullies, mow the grass regularly, prune trees that overhang the property, remove excess ground fuel and any combustible materials or flammable liquids.
  • Regularly check safety devices on the property, such as smoke alarms and fire extinguishers.
  • Ensure the tenants know how to disconnect the property’s gas, water and electricity.
  • Prepare a disaster plan – include the location of a safe place to go; talk to everyone at the property about what to do if there’s an emergency; compile a comprehensive contact list including emergency services, family/friends, medical services and vet.
  • Have an evacuation plan – everyone at the property should know the plan including how to leave quickly, all escape routes in case the preferred route is not passable, what to take (treasured possessions and pets), what to do at the property before leaving (disconnect services, turn on the sprinklers), safe places to go etc.

Bushfires are devastating – don’t risk compounding the misery by being un- or under-insured. Check your RentCover or TenantCover policy to ensure your sum insured is adequate and you understand what is and isn’t covered in the event of a bushfire.