Storms & Fires – Natural Disasters And Your Home
Having your home damaged or destroyed in a natural disaster is devastating. While these events are usually impossible to predict, one thing you can control is your insurance. If you live in an area that is prone to storms, floods or bushfires, home and contents insurance is essential. In the event of a natural disaster, the insurer will help pay for repairs and other expenses, making it easier for you to get back on your feet.
Smart tip: Storm insurance
Find a policy that specifically covers the type of flooding your area is prone to:
While insurers generally cover storm damage, the level of cover varies. Unfortunately, some people find that their claims will not be paid and end up paying the repair costs themselves. Flood cover is not offered in most home and contents insurance policies. If you already have home and contents insurance, check:
- If you’re covered for storms, floods and flash floods and how the insurer defines each event
- How much you’re covered for – ask what is and isn’t covered if you’re not sure
- If your cover is enough as repairs can cost more than you think
If you’re not happy with your current level of cover, talk to your insurer and see what they can offer. You can also shop around for a policy that’s better suited to your needs.
Floods and cyclones
January and February 2011 saw many parts of Australia impacted by flooding and Cyclone Yasi. A report by the Commonwealth Bank of Australia found that 4 in 10 Australians believed they were directly or indirectly affected. If you have been affected by a flood or cyclone and want to know what you should do about home insurance, you should:
- Contact your insurer to lodge a claim. Do this before you start any major repairs.
- Take photos before cleaning up and make a list of everything that has been damaged to assist in the claim process
- Consider removing water and mud-damaged possessions. Carpets and soft furnishings can be removed from the building as part of the clean up.
Don’t worry if your insurance documents have been lost or damaged due to the flood as insurance companies keep records electronically. You can ask your insurer to send you a copy of your policy.
Wherever you live, your home insurance needs to be enough to cover the costs of rebuilding your home. This is particularly important if you live in an area prone to bushfires.
One person who lost their home in the Canberra bushfires of 2003 and who thought they had enough insurance told us: ‘We now have a mortgage of $140,000 when we owned our home outright before’. And it is estimated that 13% of homes that require reconstruction or significant repair from the 2009 Victorian bushfires were NOT insured. See the Royal Commission’s report on the Victorian bushfires and ASIC’s reports on getting home insurance right – a report into underinsurance and making home insurance better.
Risk of underinsurance
Many people do not have enough insurance cover on their home. This can be extremely costly – and stressful – if you lose your home. Increasing your insurance cover may not cost very much, and if you shop around you may even be able to get more cover for a lower price.
How to get the right insurance
Make sure you have the right home insurance cover by:
- Using online tools or web calculators on insurance companies’ websites to estimate the total cost of rebuilding your home. Always use at least three calculators and compare as the results can differ.
- Shopping around. Get quotes from different insurers.
- Ringing potential insurers and asking lots of questions.
Australia is a great place to live but it is also a harsh environment. Taking some time to do your insurance homework will help ensure maximum protection for your home.