Australian Natural Disasters: Are You Insured?
From scorching bushfires to devastating floods and cyclones, Australia experiences its fair share of natural disasters. As a resident, you’d know that preparing for the worst is not an option—it’s a necessity. But does your insurance adequately cover you from all Australian natural disasters?
Some Australians don’t realise until it’s too late that they’re underinsured. It’s crucial that you check your current home insurance policy to guarantee peace of mind and protection. Keep reading to learn more.
Quick links:
Does home insurance normally cover natural disasters?
What Australian natural disasters are typically covered?
Why should I invest in natural disaster coverage?
How can Knightsbridge help?
Does home insurance normally cover Australian natural disasters?
Home insurance can cover a wide range of Australian natural disasters, such as fires, cyclones, earthquakes and floods. However, the extent of coverage for each event may vary significantly between providers and policies.
After severe weather events hit Queensland and Victoria in late 2010 and early 2011, a Natural Disaster Insurance Review was initiated on March 4, 2011. The driving force behind this review was not only the devastating impact of these events, but also the significant lack of flood insurance for many Brisbane and Ipswich policyholders.
Since the review, most insurance providers now include flood insurance as a standard inclusion in their home and contents policies. However, homeowners may face exceptions or significantly higher premiums in areas with elevated flood risk.
Even after the last major Southern Queensland flood in 2022, new research reveals that many residents still choose to go without home and flood insurance due to rising living costs and insurance premiums. But going without could cost you thousands. Keep reading to learn more.
What Australian natural disasters are typically covered?
In Australia, most home insurance policies will cover:
Bushfires
In most cases, insurance providers include bushfires, grass fires, and household fires in their home and contents policies. However, they often come with predefined limits, typically tied to your insured sum. Some insurance policies treat bushfire coverage as optional rather than a standard inclusion – if you haven’t yet reviewed your policy, there’s no better time than right now.
There are several standard exclusions related to bushfire coverage, including:
- Proximity of the fire to your property: You may not be eligible for coverage if a bushfire occurred more than 100 metres from your home and only resulted in smoke or heat-related damage, such as melting or scorch marks.
- Waiting periods: Bushfire-related loss or damage within 48 to 72 hours of purchasing the policy may not be covered. This provision is in place to prevent individuals from learning of a local fire event, quickly purchasing a policy, and filing a claim. However, exceptions may apply if you’ve recently switched insurance policies or just bought your home.
Storms and cyclones
Storm and cyclone coverage typically helps residents recover and rebuild their homes after damage caused by:
- Lightning strikes, power surges, scorching or fire
- Hail
- Stormwater
- Glass breakage and tree impact (provided it was well-maintained)
- Snow-related damage
However, it’s important to be aware of potential exclusions. For example, storm damage that:
- Occurred within the first 48 to 72 hours after policy purchase
- Happened after stormwater reached the ground
- Impacted pools, free-standing walls, gardens, lawns, and exterior paint.
Floods
Climate change and the increasing number of catastrophic flood events have caused insurance premiums to skyrocket – with some QLD and NSW areas surging by 50%, making them unaffordable for most residents.
Flood cover can vary greatly between providers, with many only including it as an optional extra or outlining strict definitions and rules.
For instance, most providers define a flood as overflow from an existing source, like a river, creek, or dam. However, water runoff down a mountainside or swelling pools in your backyard likely don’t count.
If your home insurance includes flood coverage, it typically extends to the limit specified in your sum insured. Covered damages may encompass mould growth, food loss, loss of contents, motor burnout, structural damage, or even total loss. However, all damage claims must link to an insured flooding event.
Common flood cover exclusions can include:
- Gradual water damage, e.g. rising damp
- The build-up of hydrostatic pressure
- Power surges – unless they result from another insured event, such as a lightning strike.
- Damage or loss caused by erosion, landslides, subsidence, or earth movement
- Damage to outdoor gardens, awnings, lawns or swimming pools
- Flood-related damage occurring within 48 to 72 hours of purchasing your policy
Important note: Flood insurance will only cover ‘catastrophic’ Australian natural disasters, not home water leakages (e.g. burst pipes).
Earthquakes, tsunamis, and volcanic eruptions
Although earthquakes, tsunamis, and volcanic eruptions are relatively rare in Australia, they are not entirely impossible. An example occurred in September 2021 when parts of Victoria experienced a minor fault line shift, resulting in a 5.9 magnitude earthquake. Additionally, tsunamis and volcanic ash occasionally impact Australia due to their proximity to regions along the Ring of Fire.
Insurance providers typically extend protection up to the sum insured if your building and contents sustain damage from these events. However, some exclusions, such as negligence and unexpired waiting periods, may still occur.
Other common exclusions
Most Australian natural disaster coverage will exclude:
- King tides, landslides, and storm swells because they are considered inherent risks of coastal living. Some storm surges might be covered, but only in the aftermath of an insurable event (e.g. a cyclone).
- Any damage worsened by wear and tear or negligence.
- Understanding your policy fineprint is crucial in protecting your home and belongings when disaster strikes. We know it can be tricky to navigate the industry jargon and different coverage options – our dedicated insurance brokers break it down into simple, every day terms and find the most cost-effective yet comprehensive coverage for you.
Why should I invest in Australian natural disaster coverage?
Peace of mind: Australia is prone to various natural disasters that can cause significant damage to your beloved home and belongings. Investing in natural disaster coverage provides financial protection and peace of mind, ensuring you can recover from the unexpected without bearing the entire financial burden.
Compliance Laws: If you have a mortgage on your home, your lender may make natural disaster coverage a non-negotiable condition.
Rebuilding and Repairs: After a natural disaster, building materials and labour costs rise due to increased demand, leading to astronomical rebuilding expenses. Insurance can assist in covering these expenses, saving you from draining your savings or going into debt.
Secure affordable and effective home and contents insurance
Many Australians find out too late that their insurance is inadequate. That’s why it’s absolutely vital to review your policy inclusions, exclusions and limits in-depth. We understand it can be stressful and confusing to navigate the various policies and premiums on offer. We can help you find the most cost-effective solution, tailored to your specific needs. Don’t wait until it’s too late – contact us to protect your home from Australian natural disasters now!
Call 1300 527 4343 or submit an enquiry online.