Floods, bushfires and termites: what does home insurance cover?

In our sunburnt country, natural disasters are inevitable. Insuring your home can help give you peace of mind and help to ensure you're financially protected if disaster strikes.

After the devastating 2019-2020 bushfires, a royal commission reported that around 38,500 building, contents and commercial insurance claims totalling an estimated $2.33 billion had been lodged, whilst warning that more concurrent and consecutive hazard events are expected. Home and contents insurance, including flood and fire insurance, are especially important when you live in a country that has seen some devastating bushfires and weather events, and is likely to see more.

Whether it's a bushfire, flood, cyclone or hailstorm, it's not about expecting the worst – it's about knowing that you and your family have financial protection in case your home and contents are damaged or destroyed.

Understand the risks

Some areas of Australia are more prone to natural disasters such as bushfires and cyclones, and it's worth finding out if you're in one of them.

• Your state emergency service or local fire service can give you information on flood and fire dangers and preparation
  
• Your local council may be able to tell you whether your house has been built to a specific standard (such as cyclone standard)

Specific types of cover

Home and contents insurance policies are not all the same: it’s really important to know what yours covers you for.

Fire cover including insurance for bushfires

Fire insurance and fire-damage restoration tends to be top of mind during Australia's peak bushfire season in summer. And if you're in a fire-prone area, you should regularly review and update your bushfire survival plan.

Building and contents cover with ANZ Home Insurance can help cover you for loss or damage caused by fire (including bushfires) to your home and your contents inside.^disclaimer 

Plus, ANZ Home Insurance includes a Safety Net as standard. This means that if your home is destroyed by fire and needs to be rebuilt or repaired, and costs exceed your sums insured, CGU will pay up to an extra 25% of your building sum insured on top of your building sum insured to help cover these costs.^disclaimer

For example, if your building sum insured is $300,000, with the Safety Net you would have coverage up to $75,000 on top of your building sum insured to cover extra costs that exceed $300,000.

Flood insurance

Flood insurance cover is a variable feature across different home insurance policies. Flood cover is a standard policy inclusion in all ANZ Home Insurance policies, however other insurers may offer:

• flood cover as a standard policy inclusion
• no flood cover
• flood cover, but with an additional loading
• flood damage cover up to a set amount

Make sure you know what your policy covers and whether it's adequate for your home and your situation.

Termite damage

Although you might think of termite damage as a 'natural' event, most insurers, including CGU, the underwriter of ANZ Home Insurance, don't provide cover for termite damage. This is because it's preventable in a way that, say, a flood or bushfire isn't. The best thing you can do is make sure the damage doesn't occur in the first place.

• Termites need moisture, so minimise it by repairing anything that's leaking or letting in water, such as taps, pipes, air conditioning units, roof tiles, etc
• Make sure external plumbing – gutters and downpipes especially – divert water away from your house
• Check foundations and woodwork regularly for tell tale signs of termites such as mud tubes, hollow-sounding wood or bubbling paintwork
• Store any untreated wood as far away from the house as possible
• Before purchasing a property make sure you commission a pest inspection to check for termite damage and understand the risk of your property being infested by termites

Choose the right insurance cover for you

Many people with home insurance underestimate the value of their building or contents, or their insurance policy isn't as comprehensive as they thought it was, and they're left short when it comes time to make a claim. With a natural disaster, your entire home and contents can be lost. Making sure you accurately value your home and contents, and that this is reflected in your insurance policy, is critical. Sum insured calculators are available from the Insurance Council of Australia to help you determine your sums insured.

Take a look through your existing policy and make sure it suits your needs – time spent ensuring you have adequate cover is always well spent. And if you're in the market for a new or more comprehensive cover, check out ANZ Home Insurance to see if it's right for you today.