Insurance
Last updated: December 2022

The information set out on this page is intended as an introduction only and should not be relied on in place of legal advice. Your entitlements will depend on your circumstances and the particular terms of your insurance policy.

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To make contact with a legal centre specific to your location

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My home is insured download checklist--->
 

What should I do first?

If it's safe to do so take photos of the damage before you start moving items or fixing things - collecting evidence is critical

 

Help
If your home or property has been destroyed in a disaster, you may be feeling shock and grief and you may be having trouble understanding information the insurer has sent you. Ask family, friends or support agencies to help you lodge your insurance claim as soon as you can. Do not sign any document until you understand what it means. You can ask for a review if you later find your estimates were wrong. Usually, after you finalise your claim, you have 12 months to do this.

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How does the policy work?
A building policy will be for a ‘sum insured’ (the specific dollar amount you are insured for) or replacement of the building. Most policies are for sum insured.

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If your policy is sum insured, usually you will get no more than the sum insured amount. However, some policies include other cover for items such as emergency housing, cleaning or clearing up a site, or professional fees for architects, accountants or planners. Ask your insurer what other cover is provided.

If your policy is for replacement of the building, the policy will let the insurer choose between paying for a replacement building or giving a cash payout. The cash payout must cover the full cost of replacement. You should be able to recover the full cost of rebuilding your property to the same standard as before a disaster.

You will need to prepare an inventory of the house and outbuildings to enable the insurer to produce a schedule of works. You should seek assistance from friends and neighbours to ensure that you provide a full and accurate description of the insured property. You should do the same in preparing a list of items to be replaced under a contents policy.

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If the insurer gives you a cash payout but this is not enough to cover the cost of rebuilding, the insurer can be asked to reassess your claim. You need to ask for a review within certain time limits – ask your insurer about how much time you have.

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How does your insurer define a fire?

"Fire cover" is a standard inclusion in home and contents insurance, but what does it actually mean? It turns out that what you're covered for is defined in many different ways. See 6 February 2020 CHOICE article. 

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Note: do not sign an insurance release form if you are not comfortable with it.

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How does your insurer define a flood?

Australian regulations include a standard definition of flood, which was introduced in June 2012.

According to the Insurance Council of Australia definition the standard definition of flood in Australia is: 

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The covering of normally dry land by water that has escaped or been released from the normal confines of: 

any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or 
any reservoir, canal, or dam. 

Even if your policy excludes flood damage, your policy may still cover you for events such as storm or rainwater damage. Storm or rainwater cover in your insurance policy may cover the situation where your house becomes inundated by rainwater that has fallen naturally from the sky. Though most insurers regard rainwater runoff as part of storm cover, some insurers won’t cover rainwater runoff or storm surge when the customer chooses not to take flood cover. These options are explained in the product disclosure statement for your policy. 

 

Check your policy wording and talk to your insurer if you do not understand what you are covered for. 

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I am in urgent need of money. Is there anything I can do to get the pay-out quicker?
Yes. Insurers must fast-track your claim if you are in urgent financial need. This is in accordance with the General Insurance Code of Practice (the code), the guidelines that insurers need to follow when dealing with claims and complaints.

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The code also says the insurer must pay you an advance payment if appropriate within five business days of you demonstrating financial need. Any advance payment will be taken off the total value of your claim. Talk to your insurer about your situation.

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You can find out more about the code at the Code of Practice website. Contact the Australian Financial Complaints Authority 1800 931 678 if you cannot come to agreement with your insurer.

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Should I accept the rebuild option or a lump sum payment?
You may be able to choose between the rebuild option or a lump sum payment, but think carefully about each option. If you choose a lump sum payment, this can take care of financial issues you face now, but you could easily spend the money and then have less money later. Under some policies, you won’t get certain benefits if you accept a lump sum payment. For example, the cost of removing debris, bushfire material upgrades and the cost of permits are typically excluded. Check your policy carefully and talk to your insurer about this.

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If I rebuild, will my insurer cover extra costs from the new building code?
If your policy was for a sum insured amount, the insurer will not cover extra costs such as changes to planning laws unless there is specific additional cover in the policy or you have increased your sum insured to cover the extra costs.

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You may, however, have cover for the new building code costs if your policy cover was to replace your house ‘as new’ or with a replacement benefit. Most policies allow for extra payments for changes to planning and building laws.

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I do not agree with the insurance assessment. What can I do?
If you do not agree with your insurance assessment, try to negotiate with your insurer. The insurer should have its own dispute resolution processes. The Australian Financial Complaints Authority can register your complaint and direct it to your insurance company.

Your insurer then has 45 days to resolve your complaint.

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If you have not been able to come to agreement after trying to negotiate, notify the Contact the Australian Financial Complaints Authority 1800 931 678 and, if possible, attach a copy of the ‘final decision’ letter from the insurer.

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Am I responsible if someone hurts themselves on my property?
You are usually not responsible for government contractors and volunteers from organisations such as the State Emergency Service. These people are covered for any accidents that may happen when helping on your land by government or organisational public liability insurance.

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However, public liability insurance cover is included in your property insurance policy. If you accept a lump sum payout for the total loss of a property, your public liability cover may stop when your payout is settled. This would be explained in the lump sum payout letter of offer. If you suffered partial loss or damage, your public liability insurance usually keeps going. Check with your insurer.

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You can buy public liability insurance coverage if you are not covered. Contact the Insurance Council of Australia for more information.

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I am not insured or I am underinsured
 

I am underinsured. Is there anything I can do?
If you cannot afford the costs to rebuild, and the sum insured amount was decided on or recommended by your insurance company, mortgage company or other financial institution, you may have a complaint against that institution for giving you inappropriate advice.

 

If you cannot rebuild and you are left with a serious shortfall between the value of your land and the amount on the mortgage, you should seek advice from a financial counsellor.

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I forgot/didn’t pay my insurance premium. What can I do?
Usually, if your policy has not been renewed or you have not paid the premium, you will not be able to make a claim. Your insurer must let you know in writing that your policy is about to finish (lapse) at least 14 days before it does. If your insurer did not do this, and you did not renew your policy, the policy will go on as if you had renewed the policy for the period of the original policy.

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If your policy has lapsed recently, and you have been a long-term customer of the insurer, you can ask for your insurance to be continued for special reasons. This might include your having had the policy in place for many years and that you had reasons that made you forget to renew your policy. Usually, however, you are not able to make a claim.

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I want to make sure my property is properly insured from now on. Which cover should I choose?
Local government has imposed significant extra requirements on rebuilding in bushfire prone areas.

If you choose a replacement policy, this will cover the additional cost to rebuild.

You will not be underinsured if you were to lose your house in future disasters. However replacement policies are increasingly hard to find. If you choose a ‘sum insured’ or ‘sum insured and replacement/additional amount’ policy for a specific amount of money it is important to make sure you have identified the true cost of rebuilding your property and ensured your policy continues to insure you for the full cost of rebuilding. Otherwise, this may not be enough to cover rebuilding if you were to lose your house again.

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"Named Insured," "Additional Insured," and "Named Additional Insured."
The insurance industry uses specific terms to convey specialised meanings, and it's important  to understand these terms to know what their insurance policies cover. The three most common terms are "Named Insured," "Additional Insured," and "Named Additional Insured."

 

Named Insured: This refers to the person or business actually named in the policy. They have the broadest protection and are responsible for choosing coverage types and amounts, paying premiums, and receiving policy notices.

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Additional Insured: An Additional Insured is a person or entity added to the policy by an endorsement. They are covered for claims arising from the acts or omissions of the primary insured but are not obligated to pay premiums or receive policy notices.

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Additional Named Insured: This is a person or business named somewhere else in the policy. They have the same rights as a Named Insured but are typically not responsible for premiums. They receive notices of policy changes and cancellations and share the same coverage limits as the Named Insureds.

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The main difference between a named insured and an additional named insured is that the latter may have more limited coverage for claims unrelated to the primary insured. Nonetheless, by having an Additional (named) insured may help with the claims process if the primary insured is incapacitated or unable to initiate or process the claim. It's recommended to consult with an insurance broker to understand these terms and ensure proper coverage for your business.

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Other insurance cover
 

Superannuation
Most people are covered for some life insurance cover in their superannuation policy. If you have lost a family member in a disaster, get in touch with their superannuation fund to make a claim for release of super and life insurance. Contact the Insurance Council of Australia for more information.

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While it is rare to get superannuation early, you may be able to get it on compassionate grounds or if you are on eligible income support from Centrelink and are having severe trouble with money. The superannuation fund may also include cover for permanent disability, temporary and total disablement, and continuing to earn a salary. Contact your superannuation fund or Centrelink for more information.

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Consumer credit insurance
You may have consumer credit insurance on your loan. This insurance covers you if something happens that means you are no longer able to meet the payments on your loan. This usually includes things like losing your job, having a sickness or accident, or if there has been a death. If you borrowed with another person and they have died in a disaster, you may be able to get loss-of-life cover. Contact your loan provider. The Consumer Law Centre may also be able to give you more information.