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.