Climate change has transformed from an abstract concept into something Aussie households and businesses are now impacted by on a regular basis. Floods, storms, heatwaves and bushfires are occurring more frequently, and as a result, Australian insurers have had to change how they assess risk, what they will cover, and what assistance they will provide for their clients when things go awry, and how they may manage claims disputes and mediation.
For policyholders, this can naturally seem like a lot to digest: premiums are rising, exclusions are changing and people want to know what protections they actually have if a major disaster comes roaring through their home.
Below, we’ll unpack the key protections in place today, and what Australians can expect from their insurers as climate risks continue to grow.
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Understanding the Basics of Your Policy
For the vast majority of households, the first layer of protection affected by climate change is their home and contents insurance, which can help you recoup some or all of the costs if your building, belongings or both are damaged during an insured event. These policies typically provide cover against common natural events such as fire, storm damage and (sometimes) hail and flood, depending on your provider.
The problem is that climate change has made defining these ‘natural events’ a little more complicated. That’s why insurance companies now look closely at your postcode, local flood mapping and fire history when calculating premiums and excesses for policyholders. In high risk areas, insurers might provide tailored cover, apply specific excesses or advise homeowners on risk-reduction steps that can lower costs.
With a precise understanding of what your policy does and doesn’t cover, you have a much better sense of where things stand and where you might need to fill in the gaps.
Flood and Storm Surge Cover
Flooding has emerged as one of Australia’s most damaging risks associated with climate change, and insurers have responded by expanding how they define and assess water-related damage. Many policies now distinguish between stormwater flooding, riverine flooding and storm surge. This may sound technical, but it’s key to whether an event is covered.
So what exactly do these mean? Stormwater flooding typically occurs when heavy rainwater exceeds drain capacity. Riverine flooding is when rivers or creeks overflow. Storm surge is linked to the sea and affects communities along the coast during cyclones or severe storms.
At least one form of flood cover is now a standard inclusion in many policies, which didn’t used to be the case. While premiums may be higher in flood-prone areas, the change is a sign that insurers acknowledge climate change isn’t going anywhere and are trying to offer more protection rather than pushing households out of the market.
Bushfire Protection and Rebuilding Support
Bushfires are not new to Australia, but increasing temperatures and longer fire seasons have shifted the risk landscape. Most home insurance policies include fire cover as standard, but the devil is in the details.
Nowadays, many providers cover ember attack, smoke harm and temporary accommodation as standard fire protection. Some also cover debris removal and rebuilding support in line with current building standards. This is because councils now require homes to be rebuilt to higher fire-resistance standards.
If you live in a bushfire-prone area, it's worth taking a close look at these provisions. It can make a huge difference in getting you back on your feet after an event.
Temporary Accommodation and Emergency Support
One of the most devastating stressful parts of a disaster is not knowing where you’ll stay if your home is damaged and becomes unlivable. Temporary accommodation cover has recently become a standard feature for most insurers, and climate-related events have encouraged them to extend this support.
Depending on your policy, temporary accommodation may include hotels, rentals or long-term stays whilst your home is fixed. Some insurers also provide emergency cash allowances to pay for essentials like clothes, food or transport in the days following an event. The support helps eliminate the stress and uncertainty in the first few weeks when families feel the disruption most intensely.
Risk Assessments and Prevention Programs
A growing number of insurers are investing in risk assessment tools that help customers understand their exposure to climate-related events. Some provide individual risk reports, home assessments, or recommendations for upgrades to make homes more resilient. These might include, for example, roof repairs, gutter guards, ember screens, drainage improvements or fire-resistant building materials.
The benefit is twofold. Homeowners receive clearer guidance on how to safeguard their property, and insurers can incentivise these improvements by lowering premiums or providing better terms. It’s a joint effort to reduce risk rather than just throwing the burden onto policyholders.
Green Rebuilding Options
As climate concerns mount, many insurers now allow policyholders to replace or repair with eco-friendly materials or energy-saving features. This could include solar systems, better insulation, or water-saving fixtures. These add-ons were typically not included in standard coverage, but some insurers have begun to offer optional green rebuilding benefits that incentivise households to make sustainable improvements after damaging events.
The logic is that if a home is being rebuilt anyway, it might as well be done in a way that minimises future risk and environmental impact. This doesn’t just help the environment. It also makes homes more resilient and potentially lower ongoing energy costs for policyholders.
Understanding What Your Policy Actually Covers
One of the biggest challenges people face during climate-related disasters isn’t the event itself, although that alone is enough to cause a high amount of stress. The more pressing issue is when they realise too late that their insurance didn’t cover what they thought it did.
With floods, storms and fires all behaving differently from year to year, keeping on top of the details in your home and contents insurance has never been more crucial. Exclusions, waiting periods and optional add-ons are examples of things that can make a significant difference when you make a claim.
The key is to review your policy once a year, ask your insurer the right questions, and adjust your cover as life changes. It’s a simple step, but it often has the biggest impact when the unexpected happens.
Ensuring Australia’s Insurance Landscape Stays Climate-Ready
Insurance is getting more complex as climate change changes the risks Australian households face. But it’s not all bad news. A number of insurers are broadening coverage, beefing up support systems and advising homeowners on how to better safeguard their homes. The trick is understanding what your policy offers, asking the right questions, and staying up to date as new protections are introduced.
The more you know, the less likely it is that you’ll get blindsided by unexpected weather events and make decisions that help you keep your home and family safe.
