Bushfires strike every summer in Australia, but in recent years we've seen more devastation than ever due to climate change. If you live in a fire-prone area it's important to know you're covered for the worst.

Are you covered for bushfires?

Fire cover is a standard inclusion for most home and contents insurance policies, but it's worth checking that the fire cover in your policy definitely includes bushfires and other associated natural disasters, as well as house fires.

Waiting periods

If you're in a fire-prone area and you're currently shopping around for insurance, be sure to ask how long you'll have to wait before the cover takes effect. And get the answers in writing, not just from a company rep over the phone.

If your home is at immediate risk and you're only just buying a policy now, it may affect your ability to make a claim. Ask any prospective insurer for their policy on embargo periods in writing and keep a record of their responses.

In the event of a fire, there's generally a waiting period of at least 72 hours before you can make a claim.

How much are you insured for?

Double-check how much you're covered for. Many insurers operate on a sum-insured model that sets a specific limit on how much you will receive, regardless of how much it costs to rebuild. You are underinsured if your insurance covers less than 90% of the rebuilding costs.

If you haven't had a good look at your level of cover in the last three years, you may well be underinsured – especially if you've renovated your home or it contains valuable items such as jewellery or art collections.

The cost of rebuilding

It's not easy to know how much it will cost to rebuild, but what is clear is that the cost of building is always going up., And rebuilding in the wake of a natural disaster can be pretty expensive due to difficult site access and higher demand for building services.

Total replacement cover

The best way to prevent being underinsured is a total replacement policy, which covers the cost of rebuilding at current prices. Currently, two insurers offer total replacement cover:

Extended replacement cover

Another option is extended replacement cover, which adds a certain percentage of payment above the sum insured amount. These companies offer cover ranging from 10% to 30% on top of the sum insured amount, either as an inclusion or an optional extra:

Government assistance

It's also important to know that the federal government has tightened the eligibility requirements for its Disaster Recovery Payment scheme. People who have been injured or whose homes have been destroyed will have access to the funds, but it will take longer for those unable to return to their homes or experiencing power shortages to get financial relief.