the 2009 Victorian Bushfires Royal Commission Report, the Insurance Council of Australia (ICA) estimated that 13% of
the properties totally destroyed were not insured. The ICA estimates the relevant percentages on a national basis for non- insurance are 4.1% for property and 28% for contents (reflecting that renters fail to insure their possessions).

Of greater concern though is the estimation that approximately one third of all insured homes are underinsured by at least 10%, however many insurance providers estimate that this level of under insurance is more like 30%. The ICA also estimates that a further 7.5% of home insurers are underinsured by more than 30%.

When considering that your home and its contents are usually the single largest investment and a place of comfort and security for your family, these figures are alarming.

‘Unfortunately most of us do not investigate our current insurance position until after an event has occurred which is TOO LATE.’

Take action now
Many of us continue to pay our policies each year forgetting that:

• we haven’t reviewed the sums insured,

• we have made improvements to our home,

• building costs are constantly increasing, and

• we add additional purchases every year (TVs, whitegoods, clothes etc) to our home contents.

What are you covered for?
A good place to start is to check your current insurance

policy to determine if you are covered for storms, floods, flash floods and bushfires. Make sure you read and understand the definitions of each. In June 2012 a standard definition of ‘flood’ was developed to give clarity when choosing insurance.

Are you under-insured?

It can be difficult to estimate the cost to replace your home and its contents. Ideally you should obtain a cost estimate to replace your property from a qualified professional. The ICA website has a comprehensive building and contents replacement calculator.

Policies with the lowest risk to you for underinsurance are ‘total replacement’ policies where the insurer agrees to pay unlimited replacement costs.

‘Sum insured’ policies have a higher risk of underinsuring you as there may be a gap between the estimated build costs and the actual rebuilding costs.

If you are unsure
Seek advice from a professional who will be able to advise you appropriately.

If you believe you are unable to afford the appropriate policy, a professional will be able to shop around for a number of quotes and consider alternatives like increasing the excess to reduce the premium. Ideally you should consider making appropriate savings somewhere else in your budget as you may not be able to afford to replace your property and contents if the worst should happen.

Reduce your risks
Once you have the appropriate insurance, inspect your property to see what can be done to bush fire/flood proof your home.

Each state fire service has guidelines for a ‘bush fire survival plan’ and property preparation.