Technical article

Cyclone, Flood and Bushfire: What a Home Policy in Australia Covers

They would like to know what that word means when a cyclone, a river or a fire comes through.

By Neil Solomon · 3 min read

Picture a couple named Ron and Alice. Both are 64. They are looking at a house near Cairns, and another in the hills outside Perth. The agent says "insured" for both. They would like to know what that word means when a cyclone, a river or a fire comes through.

I read the official pages. Here is what they say.

Cyclone

Australia runs a reinsurance pool for cyclones. The pool is run by the Australian Reinsurance Pool Corporation. Home owners do not join it. Insurers do. The page says: "Consumer policyholders... are NOT required to join the pool."

What does it cover? The page says: "This includes wind, rain, rainwater, rainwater run-off, storm surge, and riverine flood damage caused by a cyclone." A cyclone event lasts "from the time a cyclone begins until 48 hours after the cyclone ends." The pool covers home and contents, landlord policies and farm residential cover, and some strata and small business policies.

The pool is a backstop for insurers. It is not a promise from the government to the home owner. What the home owner gets is still set by the policy.

Flood

Flood is tied to cyclones in the pool, but only when a cyclone causes it. Flood from other causes is a matter for the policy.

Moneysmart, the government's money guide, gives a standard definition. Flood is "The covering of normally dry land by water that has escaped or been released from the normal confines of:" lakes, rivers, creeks and other natural watercourses, reservoirs, canals or dams. It also says that in high-risk areas "your insurance costs will be higher – or flood cover might be excluded from your policy."

Bushfire

The same guide says most policies cover fire, including bushfire. It lists what is left out:

• A bushfire that starts "less than 72 hours after you bought your policy"
• Heat, smoke, ash and soot damage, because "a flame has to cause the damage"
• Fire damage where the house does not meet fire regulations

The cyclone pool page does not mention bushfire. No official page that sets out a government backstop for bushfire was found. Each state's fire rules are left open.

What it costs

The competition regulator, the ACCC, tracks premiums. Its figures are home and contents averages, in Australian dollars as I read the releases.

The ACCC says that two years after the pool began, home premiums in higher cyclone-risk areas were 14% lower than before. In areas with no cyclone risk, premiums rose 6% in the first year. It also says: "insurance premiums remain very high for many consumers and are generally rising." No new insurers have entered the northern markets since the pool began.

An earlier release (22 July 2025) gave lower averages for the year before, for example over AUD 4,600 in north Western Australia. The years differ, so I show both and do not blend them.

What is left open

• Rules on bushfire in each state.
• How much a policy should be insured for. The Moneysmart page on that did not load.
• Whether a particular street has flood cover. Only the insurer can say.