Experts warn insurers may not pay out for bushfire-destroyed homes
Homeowners in one state have been issued a grim warning that quiet changes could leave them badly out of pocket as another horror fire season approaches.
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Homeowners are being warned they could be left out of pocket if their property is impacted this bushfire season, as insurers and local governments eye changes in regulation.
A string of dangerous weather and early bushfires in Australia’s southeast has raised fears for another devastating bushfire season after homes were engulfed by blazes in 2019-20.
Many families, particularly on the NSW south coast, spent years battling insurers to help rebuild their homes despite fire damage typically being covered by home insurance policies.
UNSW Business School insurance expert Michael Sherris said homeowners could now face even greater difficulties after subsequent changes to building codes.
“While most insurance companies should pay out, there are some issues and challenges that result in policyholders being underinsured or not insured at all,” Professor Sherris said.
“Building codes were revised after the Black Summer 2019-20 bushfire event and, depending on the risk level of the property, this impacts the cost of replacement.”
Building codes are a set of standards established by local, state, and national governments and change over time to incorporate new standards in fire safety and environmental changes.
If a home – including older residences – is found to have not complied with those new standards, insurers may not cover the cost of rebuilding the property to current standards.
“If your home’s cladding material, for instance, does not meet the building code requirements in your area, and in the unfortunate event of a bushfire causing damage to your home, necessitating a rebuild with cladding material compliant with the building code, you will incur higher costs,” Mr Sherris said.
“It is the same if you renovate parts of your property to the new building codes. Your property is valued higher because it is more resilient to bushfires. Unless your insurance company is aware of this and reassesses your insurance premium based on your new building codes, you will be underinsured.”
Watch and Act: McGuires Crossing Rd Fire, Belmore River (Kempsey LGA)
— NSW RFS (@NSWRFS) October 17, 2023
The fire continues to burn in a northerly direction, to the south west of Hat Head. The fire may reach Hat Head Rd later this evening, cutting off access to the town. https://t.co/JJWMxzp15Rpic.twitter.com/tRQ7Usor8i
In the Bega Valley, an area hit hard by the Black Summer bushfires, homeowners were advised by the local council to make vast modifications to their homes.
Homeowners were encouraged to implement bushfire-ready roofs and gutters made of aluminium-coated steel as well as floors, windows and verandas.
Professor Sherris encouraged homeowners to check if there had been changes to their home’s value and the area’s building codes and to discuss that with their insurer.
Unfortunately, Professor Sherris said, that might mean home insurance premiums increasing for some owners at a time when many families are already doing it tough.
“A major challenge we see nowadays is Australians choosing not to have insurance because the cost may be considered too high,” Professor Sherris said.
“As bushfires are becoming more prevalent, the bushfire attack level (BAL) for properties is becoming higher, which results in higher home insurance costs.
“This is a factor that insurance companies use to assess home insurance.”
Insurance giants QBE and Suncorp have both already forecast home insurance to increase by 10 per cent to cover claims as a result of the rising number of natural disasters.
For some, the devastation wrought by bushfires is already a reality. Three homes were destroyed in the Bega Valley earlier this month following bushfires near Bermagui.
On Tuesday, a man died and multiple homes were feared lost as dozens of firefighters battled a bushfire raging near Kempsey on the state’s Mid North Coast.
Originally published as Experts warn insurers may not pay out for bushfire-destroyed homes
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