How much insurance do I need for bushfire protection?

By AAMI 18 September 2023

We all hope that bushfires never come near our homes, but not every Australian is lucky enough to be unaffected. As of the 19th of September 2023, the Bureau of Meteorology has declared an El Niño weather event for this summer and homeowners are urged to act now to protect their home ahead of bushfire season.

So it's worth checking your home has enough insurance coverage, including cover for bushfires, just in case.

Know your bushfire risk

If you've recently moved or just want to double-check how likely a bushfire is in your area, state governments and local fire authorities have handy maps to help you figure out if your property is at risk:

VIC: Country Fire Authority
NSW: Rural Fire Service
QLD: Fire and Emergency Services
ACT: Emergency Services Agency
NT: Northern Territory Government Department of Environment and Natural Resources
SA: Government of South Australia
WA: Department of Fire & Emergency Services

Your home is where you and your family should feel safe… so it’s important to minimise hazards at home.

While you probably can’t guarantee a cyclone proof house or a flood proof house, there are a few things you can do to help reduce hazards at home.

Here are a few things that may help make your home more fireproof by reducing the risk of fire damage:

Always pay full attention when cooking.

Regularly inspect your chimney and electrical systems…

Always ensure you have working smoke alarms in the house.

To help reduce the risk of damage caused by bushfires to your home and family

Clean your gutters regularly, consider installing fire resistant gutter guards, cut back overhanging branches, and check your garden hose can reach your property boundaries

Remember to have a survival plan ready You can take measures to help prepare reduce the risks of flood damage

Clean gutters and downpipes regularly

Repair loose roof tiles or other damage to the roof

Have sand bags in case your area does flood

And DON’T Use electrical or gas appliances affected by floodwater, until they’ve been checked

Other household hazards include poisoning.

Carbon monoxide poisoning from fossil fuel burning appliances is another hazard.

Consider Installing a carbon monoxide detector.

Ingesting cleaning supplies or medications is another safety hazard. Keep chemicals and medications stayed safely away from children.

Water can be hazardous. Especially so for young children.

It only takes 20 seconds for a toddler to drown. Supervise young children around water at all times.

In Victoria, all swimming pools and spas capable of containing 30cm depth of water must have a compliant safety barrier. It’s important to be prepared for earthquakes.

Make sure to fasten tall furniture to walls

Store hazardous material safely away

And don’t store heavy objects on tall shelves or hang heavy items over beds or sofas.

This is by no means an exhaustive list.

Conduct your own research and conduct a risk assessment of your home.

And if you’re looking for cover for insured event like a fire or earthquake, you can find out more about AAMI’s combined Home and Contents Insurance.

Save $50 when you quote and buy online.

Head to aami.com.au for more info or find the link below! The information is intended to be of general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.

Understand how much cover you need

Do you know how much it would cost to rebuild your entire home and replace all of your belongings? This might be difficult to answer off the top of your head, but these figures are essential when deciding on the right level of cover for your home and contents.

Most home insurance policies offer a set sum insured — a value agreed upon by you and your insurer. But would that be enough to repair or rebuild your home if say, there was a spike in building costs?

At AAMI, we offer an optional Complete Replacement Cover on Home Building Insurance policies so that if your house is affected by an insured event, we will offer to repair or rebuild your house as it was, or pay you the amount of the assessed quote to repair or rebuild it. This also means:

You don't need to set a sum insured.
This cover is our best protection against underinsurance (not having enough insurance to cover the replacement value of your assets, like your home).
This cover provides peace of mind if you’re uncertain how much it will cost to rebuild your home.

Terms and exclusions apply, so be sure to read the PDS.

We all want our home and belongings protected against life’s surprises.

But what if there is an insured event and the amount listed on your certificate of insurance isn’t enough to rebuild your home or replace your contents?

This is known as underinsurance.

Underinsurance can happen for many reasons:

If your home or contents are not valued according to their repair, rebuild or replacement costs when purchasing or updating your policy.

If you renovate your home but don’t adjust the building value on your policy – also known as the sum insured.

If you purchase new items, like appliances or furniture, but don’t adjust the value of your contents on your policy.

With the cost of living rising, it may be tempting to have a lower sum insured to save money on your insurance premium.

But if you need to claim, your insurance policy might only cover a portion of the repair, rebuild or replacement costs, leaving you to pay the rest.

When it comes to choosing a set sum insured for your policy, there are a few simple steps you can take to help avoid being underinsured.

Use the AAMI Home Building and Contents calculator to get an estimated rebuild cost for your home and estimated total replacement costs for your contents.

A qualified builder can also provide further help with estimating rebuild costs according to current building standards.

Make a list of your belongings to ensure your contents sum insured is accurate. For particularly valuable items, take a photo, note their value, and save any receipts.

Keep this list up to date by adding any new items you purchase for your home.

No two home insurance policies are the same, which means it’s important to read your policy documents.

Knowing what your policy does and does not cover, and any limits that apply, will help give you confidence that you’re covered if you ever need to claim.

With AAMI, you can also choose our optional Complete Replacement Cover for the home building.

Complete Replacement Cover is our best protection against underinsurance as we’ll repair or rebuild your home as it was or pay you the amount of the assessed quote to repair or rebuild it, without you needing to set a sum insured.

And remember, don’t set and forget. As your life circumstances change, so should your home and contents insurance policy.

Regularly review your policy details to ensure your cover is up to date and meets your needs.

Download the AAMI App or log in online to update your policy.

And for other helpful tips, visit the AAMI Informed site.

Get an AAMI Complete Replacement Cover quote

What to consider when calculating your sum insured

If you choose to set a sum insured for your building cover and the amount is not the cost to rebuild your home, you will be underinsured after a significant loss.

While a lower insurance premium may seem appealing when taking out a policy, you could wind up out of pocket if your home is significantly damaged.

AAMI has an easy-to-use online home building calculator to help estimate how much it might cost to rebuild your home new for old. However, it's intended as a guide only so consider consulting a qualified expert – such as an architect or builder – for a more accurate estimate.

Contents Cover

Home building insurance will only cover the structure of your house, while contents insurance covers your belongings inside and around your home.

Consider creating an inventory of your home's contents — especially more expensive items like appliances and electronic devices — including their value and proof that you own them. This will help you estimate your contents sum insured and make it easy to keep it up to date so that you can choose the amount of cover that is right for you.

Get an AAMI Contents Insurance quote

Updated building codes

Building codes are updated periodically to ensure new homes are built according to the latest safety standards. If they've been revised since your home was built, this could add to your rebuild costs.
A new West Australian study estimated bushfire building codes can add between $16,000-$56,000 to your final cost of repair or rebuild for meeting BAL 12.5 to BAL 40 requirements and $65,000-$277,000 for meeting BAL Flame Zone requirements.¹

The costs of rebuilding

Several factors can impact rebuilding costs, including:

The style of the building and type of finishes you’ll be including.
Where your property is located. If it’s tricky to reach or on a slope, your costs could increase.
Whether you have additional structures or features on your property, like a shed or a pool.
Council permits and architect, builder or surveyor fees.

Other significant costs to consider and check whether your policy provides cover for include:

Temporary accommodation while you rebuild.
Whether you’ll need to remove any debris or demolish parts of a damaged structure.
Landscaping.

Check the terms and conditions

When choosing an insurance policy, including bushfire coverage, it's essential to read the fine print. Here are a few things to note about home insurance:

AAMI Home Building Insurance does not cover bushfire, storm, storm surge, flood or tsunami for the first 72 hours of your policy. Very limited exceptions apply. Read the PDS for more details.
Some policies cover damage caused to your home and contents by fire, heat, ash, soot and smoke that occurs within a certain distance of your home (and not only at your home).
Policies do not cover all types of damage and all types of events, so check your insurance cover meets your needs.

Got questions? Our insurance specialists are here to help. Call us on 13 22 44 or visit the AAMI Bushfire Support page.

Explore AAMI Home Insurance

AAMI has been Principal Community Partner of VICSES for the last twenty years. Through this partnership AAMI has helped equip 150 SES units across the state and provided VICSES with financial and in-kind support to educate the Victorian community about disaster resilience.

¹ Fire Australia

AAMI Insurance is issued by AAI Limited ABN 48 005 297 807 trading as AAMI. This advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before you make any decision regarding this product. The Target Market Determination is also available.

The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.