New Rating System for Homes at Risk

New rating system launched

Following the ‘Black Saturday’ and ‘Blue Mountains’ bushfires in recent years, the Australian Government in conjunction with local councils and fire services, has amended the requirements set out in Australian Standard 3959 – Construction of Buildings in Bushfire Prone Areas.

A Bushfire Attack Level (commonly known as BAL) Rating has now been applied to all domestic buildings located within 100 metres of bushland vegetation.

The BAL Ratings that have been assigned (from lowest to highest) are:

1. BAL – LOW

2. BAL – 12.5

3. BAL – 19

4. BAL – 29

5. BAL – 40

6. BAL – FZ (Flame Zone)

These ratings are based on factors such as the region where you live, the vegetation type around your property, the distance from your home to individual vegetation types, and the slope of the property.

This means that if your property now has a BAL Rating applied to it, then the costs to repair or rebuild your property have increased, sometimes dramatically, to now comply with the new amended Australia Standard laws. The additional costs are not strictly limited to fire damage only, but also apply to all claims affecting the external components of the building such as roof, walls, gutters, eaves, windows, doors, decks etc. So if your property suffers damage through events such storm, hail, impact, accidental damage etc. then the repair costs will be impacted by the BAL Rating.

So what does this mean for insurance? Depending on the BAL Rating applicable to your property, the additional costs associated with the rectification of damage caused to your property, be it by fire, storm, impact, etc. need to be included within your Building Sum Insured and not be exhausted under your insurance policy.

The Building Sum Insured nominated on your insurance policy now needs to be increased to include these additional costs otherwise it will result in under-insurance leaving you with either an unfinished home or personal financial contribution (outside insurance) to complete the repair or rebuild of your property.

The recommended additional costs have been set at:

1. BAL – LOW
No additional cost

2. BAL – 12.5
Additional $5,000 – $15,000

3. BAL – 19
Additional $20,000 – $30,000

4. BAL – 29
Additional $30,000 – $50,000

5. BAL – 40
Additional $50,000 – $80,000

6. BAL – FZ (Flame Zone)
Additional $100,000 – $120,000

In order to determine the BAL Rating applicable to your property, please contact your local council who will be able to provide you with this information. Once obtained, a calculation can be provided for the average additional costs that should be included in your building sum insured and added to your insurance policy to ensure you are adequately protected in the event of a loss.

If you would like more information regarding BAL Ratings, please contact your CQIB broker.

“The Cloud”. What is it? Where is it?

In the simplest terms, ‘cloud computing’ means storing and accessing data and programs over the Internet instead of on and from your computer’s hard drive. ‘The cloud’ is just a metaphor for the Internet. There is no real, puffy white cloud involved; it’s just a 3rd party service provider’s server, somewhere.

When you store data on or run programs from your computer’s hard drive, that’s called local storage and computing. Everything you need is physically close to you, which means accessing your data is fast and easy (for that one computer, or others on the local network). Working off your hard drive is how the computer industry functioned for decades and some argue it’s still superior to cloud computing.

The cloud though, is not about the hard drive in your desktop computer or hard drive server in residence.

To use the cloud you need to access your data or your programs over the Internet or at least have that data synchronised with other information over the Internet. With an online connection cloud computing can be done anywhere and at anytime on smartphones, pads or tablets as well as desktop computers.

The serious business, and where the money is, is in the cloud-based software programs. These include ‘Software as a Service’ (SaaS) where businesses can subscribe to an application over the Internet (examples: Adobe Creative Cloud, Salesforce.com). There’s also ‘Platform as a Service’ (PaaS) where business can create its own custom applications for use by all in the company. And of course the major players who offer ‘Infrastructure as a Service’ (IaaS) where companies like Google and Amazon provide the backbone that can be rented out by other companies as a platform for their services; Netflix being one, a customer of Amazon cloud services and due to launch in Australia in March this year.

Cloud computing is big business. Global management consulting firm, McKinsey & Company claims that 80% of the largest companies in North America that it surveyed are either looking at using cloud services – or already are.

The cloud in its many forms is an exciting development but it also creates new types of challenges in protecting sensitive information assets. A business-focused risk-management approach enables companies to strike the right balance between protecting data and taking advantage of more efficient and flexible technology environments.