Losing your home to bushfire: How to protect yourself financially

Jessie RichardsonDecember 7, 2020

As anyone who lives in a bushfire prone area knows, fire doesn’t discriminate. Earlier this month, Barefoot Investor Scott Pape and his family sadly lost their home as fires engulfed Romsey, Wallan and Kilmore in Victoria, showing that even the savviest homeowners can find their property in peril.

A CFA member, Pape wrote that after his wife and son left the area, as they always do on potentially bad bushfire days. He remained, and with others fought to protect his property, before rounding up his livestock and evacuating his dogs.

Thankfully, the Pape family is safe. But they and many others are now faced with the reality of restarting their lives after losing their homes in tragic circumstances. While the emotional and physical effects of the bushfires will be long felt, those losing their properties must also bear the financial cost of the fires.

For those in areas prone to bushfires, insurance is one of the key ways to protect yourself in the event that your property is lost. Home building and contents insurance, offered by most major insurance providers, can offset a good proportion of the financial costs of losing your home.

Make sure you understand exactly what level of coverage you have under your insurance plan when you purchase it. And before bushfire season begins each year, take the time to go over your insurance policy again to make sure it covers all of your major assets.

When it’s time to renew your policy, or when purchasing it, it’s worth making an inventory of all the assets you want to insure in your home. As for the home rebuild itself, get a builder in to get a quote for the cost of rebuilding your property should it be destroyed. These can be time consuming tasks, but ones that will ultimately help you make the best decision about the appropriate level of coverage and hopefully reduce any hidden costs further down the line.

If your home is damaged or destroyed by a bushfire, make sure you photograph any damaged goods as evidence for your claim before you discard them. As always with insurance claims, the more evidence, the better – this is where your inventory of goods will come in handy again, so you can keep track of exactly what has been damaged for your claim.

It’s also a good idea to contact your insurer as soon as possible to begin processing your claim and so that you can get started on any major repairs quickly.

If your vehicle is damaged, your insurer may also be able to provide you with an interim vehicle while your claim is being processed. And remember, the insurance market in Australia is highly competitive – shop around before picking your insurance policy.

For many rural residents, the loss of their property also means the loss of their income generating asset, whether that’s a farm or a bed and breakfast. While most insurers only offer income protection for individuals who cannot work due to injury or illness, your state government may offer support following a natural disaster, as the NSW government did after the bushfires of October last year. However, there’s no guarantee that this will be provided, and it isn’t available for those who lose their homes in circumstances that don’t have a wide impact, like a house fire. As always, it helps to have some savings on hand to make up for any loss of income.

The loss of one’s home is always an incredibly difficult experience. There will always be an emotional cost, no matter what you do. But at the very least, a good insurance policy or sound forward planning may protect you from some of the financial burden, and free up your attention to focus on the bigger things.

Our thoughts are with all affected.

jrichardson@propertyobserver.com.au


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