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How much insurance do you need for bushfire protection?


We all hope that bushfires will never approach our home, but not every Australian is lucky enough to be unaffected. Ensure your home has enough insurance coverage, including cover for bushfires, just in case.

Know your risk

Chances are, you’ll know your risk already. But if you’ve recently moved to a new area, check out how prone to bushfires it is. State governments and local fire authorities provide maps that can help you figure out whether your property is at risk:

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Understand how much cover you need

Knowing how much it would cost to replace your home and contents helps you determine how much cover you need. If you’re unsure about the amount of cover you need or are concerned that the amount needed may change, you may wish to consider choosing an insurance policy that offers complete replacement cover rather than a policy where you need to choose a sum insured.

‘Complete replacement what?’ we hear you ask. Let’s break it down:

Home building insurance policies often have a set sum insured, which is agreed upon by you and your insurer. It’s the maximum amount your insurer will pay in the event of a claim. AAMI offers you the option of Complete Replacement Cover, which means you won't have a set sum insured limit for rebuilding your house. Once your claim is approved, we'll choose to repair, rebuild your house as it was, or pay you the amount of the assessed quote to repair or rebuild it. It means you won’t have to worry about setting a specific sum insured, and helps avoid the risk of being underinsured if, say, there’s a sudden spike in building costs after a large bushfire, storm, cyclone or earthquake.​

More About Complete Replacement Cover

What to consider when calculating your sum insured

If you’ve decided to set a sum insured, make sure you avoid underinsurance.

According to the Insurance Council of Australia, 10% of home insurance policy holders ‘understate the cost of replacing their home to lower their insurance premiums.’1 While a lower insurance premium may appeal when you take out a policy, you could wind up out of pocket if you ever need to make a claim.

There are free resources, like our snazzy online home contents calculator, that can help you estimate how much cover you need. Just know, the estimate is intended as a guide only, and it can be helpful to chat with an architect or builder for a more accurate idea of your potential rebuilding costs.

Contents cover

Home building insurance will only cover the structure of your house, so you might find it useful to cover your belongings as well with contents insurance. When thinking about a contents policy, it can be useful to record the details of your possessions. One way to do this is to create an inventory list of the contents in your home, which keeps track of them along with proof of ownership and value.

Knowing how much your things are worth can help you estimate your sum insured. And if you keep adding new items to your inventory, especially pricey ones like appliances and electronics, you can keep your sum insured updated accordingly and be more likely to have the right level of cover. Easy!

Updated building codes

Building codes are updated every now and then to ensure new homes are built to the latest safety standards. If they’ve been updated since your home was built, that may add to your building costs. The Insurance Council of Australia2 estimates that new bushfire building codes can add between $100,000-150,000 to your final cost.

The costs of rebuilding

When it comes to rebuilding, there are a few things that may impact costs:

  • 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 garage or pool.
  • Whether you’ll need to remove any debris or demolish parts of a damaged structure, or account for landscaping costs.
  • Temporary accommodation while you rebuild.


Building a home from scratch has its fair share of fees. Council permits, and architect, builder or surveyor fees can add up. Check if your policy covers them or have a yarn with someone who knows their stuff to help make sure your cover and sum insured will account for the cost of rebuilding.

Get to know the terms and conditions

When you take out an insurance policy to cover your home, including bushfire coverage, it’s important to read the fine print. Here are a few things worth being aware of:

  • 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 detail. Though, you may be covered if your policy began on the same day you bought your home or if a previous policy on it expired (and only to the sum insured covered under the expired policy for the first 72 hours).
  • Some policies may not cover certain types of damage or things at all, so it’s important you check that your insurance meets your needs.
  • Loss or damage caused by fire (includes bushfire) and heat, ash, soot and smoke that is the direct result of a fire within 100 metres of the insured address.​
  • If you have a mortgage on your existing house and your house is destroyed, your bank may be able to claim your insurance payout to cover the remaining amount on the mortgage and you may need to borrow money to rebuild.

Any questions? Get in touch with one of our insurance specialists today on
13 22 44 or visit the AAMI Help Centre today.

Read more:

1 The Sydney Morning Herald: Under-insurance leaves householders exposed this bushfire season

2 The Australian Financial Review: 10 steps to test your home insurance

Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Any 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.