How to decide if you need bushfire insurance

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Our wide, brown land does come with its challenges, especially insurance affordability. Here’s what you need to know if you live in a bushfire-prone area and want to stay insured.

By Carolyn Tate

Whether you're a homeowner or renter, bushfires pose a serious risk – not just to your safety but also to your property and assets.

The 2020 bushfire royal commission found that 90% of buildings in bushfire-prone areas aren’t built to survive fires. That already leaves up to one million homes in bushfire-prone areas vulnerable and it’s only going to get worse.

“There has been a long-term increase in dangerous fire weather, and in the length of the fire season, across large parts of Australia,” the report concluded.

The time to get a firm grasp on what you need to know about insurance is now.

What’s your fire risk? 

Before we start diving into the ins and outs of bushfire insurance, it's important to have an idea of your property's overall fire risk. Understanding your specific risk level forms the foundation to make informed decisions about how you can protect your home and family. 

Your local council can provide general information about bushfire likelihood in your area. You can also check your state map to determine if your home is in a bushfire high-risk area:

• ACT
• Queensland
• NSW
• Northern Territory
• South Australia
• Tasmania
• Western Australia

While a general overview is good, your real starting point should be calculating your home’s specific bushfire attack level (BAL). BAL is a way of measuring the severity of your home’s potential exposure to ember attack, radiant heat and direct flame contact. 

Your BAL rating determines requirements for construction to improve your home’s protection from bushfire attack. The six ratings range from ‘BAL Low’, where there is insufficient risk to warrant specific construction requirements, to ‘BAL FZ’ (‘flame zone’) where your home is assessed as potentially directly exposed to flames, heat flux and ember attack. You can deep-dive into the acceptable construction practices for each BAL rating at the National Construction Code. 

Note that while you can retro-fit many of the BAL fixtures required in all new builds and rebuilds (eg. fire shutters over windows in BAL FZ), it can be very expensive. Consider the risk of your property against the cost and benefits of adding to your home’s current fire-proofing measures.

If you want to calculate the risk of your existing home, the CSIRO’s Bushfire Attack Level of Assessment tool can help. If you’re renovating or rebuilding, you’ll need to get a thorough professional assessment. You can find a qualified BAL assessor through the Fire Protection Association Australia.

Do you need bushfire insurance?

Deciding whether you need bushfire insurance comes down to two main factors: your property's location and your level of risk tolerance.

Of course, a third factor is affordability. The cost of home and contents insurance premiums has soared in recent years due to high inflation and increasingly frequent natural disasters, including bushfires. Increasing insurance premiums are among the fastest-rising costs for households and ABS annual living cost data shows high insurance premiums are one of the main contributors to household budget pressures.

That said, lower premiums are often saved for new customers, not loyal ones. 

If you live in a fire-prone area, shop around to find the most cost-effective bushfire cover. It’s quite alarming how much the cost of premiums vary and it’s a known fact that if you’ve been with the same insurer for many years, you are probably paying a hefty ‘loyalty tax’. 

If you live in a lower-risk region you might opt for a different level of cover or higher excess to keep your premium costs down. Balancing your risk exposure with your financial capacity is key.

Cover you need if you own your home

Homeowners will naturally have a comprehensive role in bushfire preparedness. Beyond insuring the property's structure and contents, homeowners should also be thinking about their property as an investment, and taking proactive steps to protect it. 

Talk to your insurer to understand what their fire policy covers and, more importantly, what it doesn’t. You should always be covered if you have to evacuate your home, so consider whether you'll need to have alternative accommodation provided.

Questions to ask include:

• Is there a waiting period?
• Is your area considered ‘bushfire-prone’ by the insurer, and what does this mean for your premiums?
• Does the policy cover heat, ash, soot and smoke damage if the fire doesn’t reach your property?
• Does the policy cover things like landscaping, rebuilding, and temporary accommodation?
• Does the policy cover fences and sheds?
• Does the policy cover gardens, paths, paving, and gardening equipment?
• Does the policy cover burnt tree removal?

Cover you need if you're renting

As a renter, you should discuss emergency plans and bushfire preparedness with your landlord to ensure your own safety and protect the property. 

Ask them what their insurance covers in the event of a bushfire. Landlord's insurance (if they have it) will usually cover the building structure, but not your personal belongings. 

For that, you’ll need renter’s insurance, which can protect your possessions, such as clothes, furniture and valuables, in the event of fire damage. 

In the event of a bushfire, if your home is still fit to live in your landlord is obligated to urgently make all necessary repairs (regardless of whether they’ve received an insurance payout or not). 

If you think the property is unfit to live in, you can terminate your lease agreement, but generally your landlord is under no obligation to find you somewhere else to live. Be aware that your landlord can dispute your end-of-tenancy notice if they believe the property is liveable.

If you can’t reach an agreement, you’ll need to have your local tenancy authority assess the home for liveability. This is based on cleanliness, access to essential services, and health and safety risks at the property. The tenants’ union or advice centre in your state is a good first port of call:

• ACT: Tenants’ Union
• Queensland: Tenants Queensland
• NSW: Tenants’ Union
• Northern Territory: NCAT
• South Australia: RentRight SA
• Tasmania: Tenants’ Union
• Western Australia: Green Circle

What you can do to minimise your risk

Minimising bushfire risk is really about being proactive, especially in the spring leading up to fire season. Implement fire-resistant building materials, clear vegetation near your home, clean out your gutters and establish an emergency evacuation plan. Engage with local fire authorities, stay informed about regional bushfire conditions, and create a bushfire plan so you’re not caught by surprise.

Stay up to date with local alerts through the ABC Emergency maps. Enter your postcode and alerts in your immediate area will be shown.

Keep your mobile phone with you at all times during the bushfire season. The national Emergency Alert system will automatically send you local warnings from the phone number +61 4444 444 444.

You can also download the relevant bushfire alert app or website map for your state. Most update across Australia, but it’s a good idea to have the one operated by your local emergency service:

• ACT: Fires Near Me (Apple IOS / Android)
• Queensland: QLD Fire and Emergency Service
• NSW: Fires Near Me (Apple IOS / Android)
• Northern Territory: NT Public Safety (Apple IOS)
• South Australia: Alert SA (Apple IOS / Android)
• Tasmania: TAS Fires (Apple IOS)
• Western Australia: MyFireWatch

When to review or update your policy

Regular policy reviews are essential to ensure your coverage is up-to-date and adequate for your needs. Re-evaluate your insurance policy whenever it comes up for renewal, or if you make structural changes to your property, acquire any new assets, or have significant changes in your financial situation.

Check whether your insurer offers an underinsurance safety net for building cover. This is where instead of setting a specific sum insured, your insurer commits to restoring your building as-is, regardless of the cost.

Depending on the level of the safety net, you might be able to claim up to 30% above the sum you insured your home for. That way, if the cost of rebuilding your home escalates in the wake of a bushfire, you’re still adequately covered.

Also take into account the extra costs involved in cleaning or rebuilding your home following a bushfire. These include debris removal and compliance with updated construction costs associated with your BAL rating.

Take updated photos of your property and belongings and keep records somewhere other than in your home. If you save digital files and photos to the cloud, they can be retrieved anywhere, even if you lose your computer. This will help you maintain a good level of protection at all times.

What to do if you are affected by bushfire

If the worst happens and you are affected by a bushfire, the first thing to do is to prioritise your safety and the safety of those around you. Follow all evacuation protocols and don’t hesitate to leave your property if you are in danger. 

Notify your insurer as soon as you can, and provide comprehensive documentation of any damages, including photographs and detailed descriptions. Engage with emergency services and support organisations, which can help you to navigate the recovery process.