Why now is a good time to check your home insurance

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Did you know that if your home gets destroyed by a bushfire in Victoria you may be obligated to rebuild to a higher standard offering greater bushfire protection?

And that the additional costs involved in this can add up to a further $100,000 on top of your home rebuild expense?

Susan Allen, RACV executive general manager, Home, says changes to Victoria’s building legislation have potentially major implications for RACV members with home insurance.

That’s because many members need to allow for this additional rebuild expense in their insurance cover to ensure they can rebuild to an equivalent level should the worst happen to their home.

“The introduction of bushfire residential building standards following Black Saturday has been a great step forward in improving safety and building greater resilience in Victorian communities, and we fully support them,” Ms Allen says.

“But we want to make sure our members with homes in bushfire prone areas have factored these additional building costs into their insurance calculations – we don’t want any member to get caught short financially because they were unaware they were under-insured.”

Unfortunately, RACV home insurance claims following the Wye River bushfires in December last year indicate that this message is still to hit home, Ms Allen says.

“Almost two-thirds of members’ homes that were destroyed by the Wye River bushfires were found to be underinsured, and we don’t want this to continue.”

Victoria is one of the most bushfire prone areas in the world, and the majority of the state – around 90 per cent of the land area – is a designated bushfire prone area.

Under current Victorian legislation, all new homes, alterations and additions in designated bushfire prone areas must be built to a Bushfire Attack Level (BAL) rating of at least BAL–12.5, which is able to withstand ember attack and a considerable level of radiant heat.

While this additional protection ensures your property is safer, the building sum insured in your home insurance policy needs to include the additional building costs required to meet these new standards should you need to do so, Ms Allen says.

For example, the minimum BAL–12.5 rating requires the use of specific building materials and involves the use of non-combustible  materials for the roof, doors and windows among other things. 

“Some RACV members appear to be unaware that changes in building legislation in Victoria have potentially increased the rebuild cost of their property and they may be underinsured.

“So please review your sum insured with us to make sure you have the right level of insurance cover to enable us to fully protect your home.”    

What to do next

A great place to start is the RACV Buildings Calculator at racv.com.au/calculators. This will give you an estimate of your home rebuild cost at today’s prices, taking into account relevant changes in building legislation.

To update your insurance policy, to discuss this issue or for further help, simply call us on 13 RACV (13 7228) or drop into your nearest RACV shop.

To check if your property is in a designated bushfire prone area in Victoria, please go to the interactive map service at the state government’s land.vic.gov website.

To assess the existing Bushfire Attack Level at your property, please contact your local council, your local fire service, or a registered building practitioner.

If you are interested in upgrading your existing home to provide greater bushfire protection, the Victorian Building Authority has published 'A guide to retrofit your home for better protection for a bushfire' which you may find useful.

What has changed

Following the Black Saturday bushfires, the national code for building in bushfire prone areas was updated to improve the performance of buildings when subjected to a bushfire. The Victorian Government also undertook extensive statewide mapping to determine where these standards should apply.

Under the new standards, all new builds, extensions and alterations in a bushfire prone area require a bushfire assessment (including a Bushfire Attack Level (BAL) rating) to determine the materials and construction methods that should be used for better protection.

The minimum standard in a bushfire prone area is BAL–12.5, and higher BAL levels can be required, depending on the site assessment.

Retro-fitting existing properties to meet these standards is not mandatory, but it will make your property safer should you choose to do so.

The new standards improve bushfire protection but do not guarantee a building will survive a bushfire. However, research by the CSIRO following the Wye River bushfires in December 2015 indicates that those properties built to the new standards had a higher survival rate than those that weren’t1.   

1. Wye River / Separation Creek Post-bushfire building survey findings, CSIRO Land and Water, April 2016 (Report EP16924).

What is BAL and why is it important?

The Bushfire Attack Level (BAL) is a national standard with six bushfire risk categories, and specifies the construction requirements when building in a bushfire prone area.

The BAL is determined by the location of a property in the bushfire prone area and takes into account factors such as the type and proximity of vegetation around the property, and the slopes around the building.

The numerical value associated with the BAL represents the maximum expected radiant heat that will affect the property should there be a bushfire.

BAL–12.5 is the minimum requirement for a property in a bushfire prone area, and there are four BAL levels above this. To put this level in context, radiant heat at half the BAL–12.5 level will result in pain after about eight seconds of skin exposure.   

In brief

  • Building standard changes to improve bushfire resilience in Victorian communities have also increased the rebuild cost for many homes
  • This has significant home insurance implications for RACV members
  • The recent Wye River bushfires indicate that some RACV members have yet to adjust their building sums insured to account for these increased costs
  • That’s why we are recommending you reassess your level of cover with us as soon as possible, and take steps to adjust your sums insured as appropriate

RACV Home Insurance is issued by Insurance Manufacturers of Australia Pty Limited ABN 93 004 208 084 AFS Licence No. 227678. Please consider the relevant Product Disclosure Statement before buying. For a copy call 13 RACV (13 7228).