The Bushfires which have raged to a large portion of Australia’s landscape was an unprecedented event. 12 million acres (five million hectares) have been destroyed. To put it into perspective, that’s twice the size of Wales, and larger than Denmark.

Some 1,365 homes have been destroyed in New South Wales alone. Not counting the millions of wildlife lost and unfortunately, the many lives lost with many still missing and unaccounted for.

Over 300 Filipinos have been directly affected and Australia is still in the middle of summer, this bushfire season will still take a while.

What is the economic impact? 

As of the 7th January, the Insurance Council of Australia (ICA) says 8,985 claims worth $700 million have been lodged. But the ICA noted the true cost of the Australia fires will be much higher, as many of those whose property was ravaged by the fires were either underinsured or have no insurance at all, The Sydney Morning Herald reported. 

So what to do you need to know about Insurance policies, especially regarding bushfire cover?

Thankfully, most home insurance policies will automatically cover damage caused by fire.

In this case, when taking out an insurance policy, you don’t need to specify you need bushfire cover. In the 2011 floods in QLD, many people were left uninsured because they didn’t have flood coverage. It was an issue because many people elected to not take it, or were not informed they needed to nominate the cover. 

Why are many people underinsured? 

Underinsurance is a common occurrence when many people just “rollover” their insurance renewal every year. Without taking into consideration inflation and increased building costs, a home purchased for $300,000 in 2010 will most definitely be not the same value in 2020.

It’s important you review your building Sum Insured every year. The same goes for contents Sums Insured, as people are always upgrading valuable items. 

Difference between Home and Business Insurance

Businesses affected in the fires will have a different level of cover. Other than the loss of property and business assets, there will be a loss of income during the rebuilding process.

Statics show many businesses don’t survive after a catastrophic loss if Business Interruption was not part of their Insurance Program. Business interruption insurance (also called business income insurance) is a type of insurance that covers the loss of income that a business suffers after an insured loss.

Aside from bushfire cover, what should you look out for on your existing policy for other disasters?

Other than the already mentioned flood cover, keep an eye out on earthquake and Cyclone covers. Sure it may not affect some parts of Australia, but areas where it is a concern, check what excess is applicable.

Fine prints to be made aware of

Check if there is an embargo clause. If there is an imminent bushfire in the area and you decide to take out a policy, most Insurance companies may put a 48 hour, or in some cases 72-hour embargo. This means if you take out a policy today, and the bushfire burns your house tomorrow, you will not be covered.

What to do if affected by the bushfires

With many areas still too dangerous to access, a key priority is to ensure any vulnerable customers are immediately provided with emergency assistance; including temporary accommodation and emergency payments. 

 Tips in lodging a claim

  • Know who to call. If you are dealing with an Insurance Broker, call them. 
  • Most total loss claims will have an assessor come out to the premises
  • If you can salvage any valuable items, do so.
  • If you have any receipts/photos which may assist the assessor, have them handy. Essentially the insurance company will want proof of ownership. This will only speed up the settlement process.

Did you find this article useful? Do you have some ideas of your own that you can share to our readers? Share your experience by leaving a comment below.

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