With bushfires burning around the country, it’s important for homeowners in fire-prone areas to take steps to ensure they have the right insurance in place.
This is especially important given how easy it is for people living near the bush to find they are underinsured after suffering a bushfire.
Ian Mabbutt, Head of Steadfast Direct, explains that all too often, people find themselves unintentionally underinsured when it comes time to claim after a bushfire devastates their home.
“Policyholders don’t usually intentionally underinsure their homes, they just don’t know how to go about working out what they need to insure for,” he says.The problem happens because most people know what they paid for their home, but this is a different value to how much it costs to rebuild it. Luckily there are lots of steps people can take to help ensure their home is properly insured for the full cost to rebuild it. For instance, an insurance broker can help you calculate how much insurance you need. Steadfast brokers have access to a calculator that includes many questions about your home to determine the right level of insurance cover. If you’re living in a bushfire area, it includes questions about how close the home is to bushland. The closer it is to bushland, the higher the rebuilding costs, to help ensure it meets rebuilding compliance rules set out under the Bushfire Attack Level rating (BAL).
“A BAL measures the potential for your home to be exposed to fire”
A BAL measures the potential for your home to be exposed to fire, ember attack and radiant heat. Properties are assessed under six BAL ratings from BAL Low, which means the risk is low enough so there are no special building requirements, to BAL FZ which means the building could be directly exposed to fire.
The calculator also takes into account the number and size of bedrooms on the property, the number of bathrooms, the square meterage of the home and whether it’s on a sloping block of land. It also considers whether the property has a garage or carport and for how many cars. The quality of the finishings in the home and any home improvements such as a pool, deck or garden shed are also taken into account. “It will determine a reasonably accurate estimate of the rebuilding costs,” says Mabbutt.
The Insurance Council of Australia also maintains a web site called understandinsurance.com.au that also has a building sum insured calculator. When you’re working out the rebuilding costs, it’s also an idea to consult a builder or architect, who may be able to provide an accurate estimate of rebuilding costs. They should be familiar with building code requirements in your area.
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