Australia’s unique landscape is known for many things, from our stunning beaches to our iconic red centre. However, it’s also known for its harsh and unforgiveable environment – particularly in summer.
When you live in Australia, considering how a natural disaster may impact your home is an unavoidable reality. This is where home insurance can be a lifeline for disaster-affected households.
But not all home insurance cover is created equally. In fact, areas that are more prone to disasters may see residents charged sky-high premiums.
If you’re looking to buy a home in Australia, it’s crucial that you know what disasters home insurance can cover. And, more importantly, how you may be charged for that coverage.
If you’re looking to take out home insurance, you’ll need to find out if your home is in a natural disaster-prone area.
To do this, you’ll want to contact:
- Your broker/real estate agent – they should be able to tell you key features of your property’s area.
- Your local council.
- Emergency services organisations in your area.
In Australia, two of the most common disasters are floods and bushfires. Some of the key things to be asking when looking into whether your property is in a disaster-prone area is flood mapping and historical flood records as well as your property’s Bushfire Attack Level (BAL) Rating.
Your BAL Rating may influence any premiums you may need to pay to receive home insurance coverage. The BAL Rating is a 5-level scale, ranging from low risk to extreme risk:
- BAL-12.5 – low risk
- BAL-19 – moderate risk
- BAL-29 – high risk
- BAL-40 – very high risk
- BAL-FZ – extreme risk (Flame Zone)
Unfortunately, in some cases insurers may choose not to provide insurance if they think that the risk of a significant claim being made is too great.
Insurers look at a range of factors to come to this conclusion, including your claims history, the history and/or cost of natural disasters in your area, the year your home was built, the construction materials of your home, and much more.
What disasters are considered in home insurance
Depending on where you live, these are some of the disasters you should be considering when selecting the right home insurance for your property:
- “Floods – inland flooding accounts for nearly a third of insured losses in Australia.
- Earthquakes — although Australia doesn’t have a high incidence rate of destructive earthquakes, there have been enough, four to be exact, in the last 40 years to make it worth considering as a key point of coverage in any potential policy.
- Cyclones — particularly if you are in the Northern Territory and northern parts of Queensland and Western Australia.
- Bushfires — there aren’t many parts of the country that are immune to the risk of bushfires, and we have seen multiple significant losses, particularly in recent years as the climate appears to be increasing in dryness and warmth, both of which are prime conditions for bushfires.
- Hail — severe hailstorms have become an increasing threat in recent years, and they have the potential to cause significant damage.
- Storms — as with bushfires, severe storms have the potential to cause widespread damage across most parts of Australia.”
Once you’ve determined if your property is in a disaster-prone area, and what kind of disasters you may be affected by, you’ll have a better understanding of what you may be charged for coverage.