Insuring yourself for disaster season through policies, cash and investments

The Australian summer months may accompany the festive season wind-down, but are also unfortunately strongly linked to disaster season. Be it the threat of tropical cyclones in the far north and associated flooding, storms or bushfires everywhere else, there’s much for homeowners to be conscious of.

Now is a good time to double-check your policy for what you’re covered for and what you might need to do in the event you need to claim on your cover.

In this article, I’ll look at a few things to check, share some basic tips from emergency services for preparation, and investing for natural disasters.

Know your property

Do you know if you live in a flood zone or if your property could be at risk of fire damage in a bushfire?

Don’t assume you’re safe – you could live in a hilly region over 100m above sea level and still have a flood risk for your property related to underground water or historic river pathways that have been built over. Equally, not being able to see the bush out your window doesn’t guarantee you don’t have a fire risk.

You can check the level of risk you have for these with your local council, regional and state emergency services, or even through tools like Landchecker or Steadfast Flood Risk Tracker. You can track active fires on the government site MyFireWatch.

Here’s a list of SES websites for you to visit, track emergency situations or request assistance:

• NSW State Emergency Services
• QLD State Emergency Services
• NT State Emergency Services
• ACT State Emergency Services
• VIC State Emergency Services
• SA State Emergency Services
• TAS State Emergency Services
• WA State Emergency Services

Checking your policy

Storms and fire protection are typically standard parts of home insurance cover, but your cover may be affected by whether your home complies with fire regulations. As regulations change over time, if your property is damaged, the cover may only cover direct replacement rather than the costs of repair and bringing the property up to the latest requirements.

If you think this could affect you, it’s worth getting in touch with your insurer to discuss what replacement really looks like and whether you want to self-cover the difference out of pocket or upgrade your insurance cover to a higher level (which comes with added costs).

The Insurance Council of Australia offers a building calculator to help you estimate the amount you might need for rebuilding.

Bear in mind that your cover in these instances might not include smoke or heat damage, and if you haven’t taken reasonable measures to protect your property.

Flood protection, on the other hand, is not necessarily standard cover – in some instances, insurers won’t offer protection for properties in extremely flood-prone areas, or if they do offer it, it’s at rates that may be unaffordable for many. If your attempts to gain flood cover are rejected and you’ve lodged a complaint through the insurer’s complaint department, you can also appeal through the Australian Financial Complaints Authority – though there’s no guarantee of appeal.

Always check the list of exclusions on your policy to see if you can manage with these or not. If some of the exclusions might be critical, it’s a good idea to contact your insurer to discuss your options.

You can compare your insurance policy with others on a range of commercial sites – just keep in mind that these comparison sites might earn a commission on any policy you choose, and it’s not always easy to compare like with like, so doing extra research on insurer websites can be worthwhile.

Protective measures in disaster season

There are a number of steps emergency services recommend taking, depending on what emergency risk you might face. Before that point, though, it’s worth having a disaster kit.

In your disaster kit, you should have at a minimum…

• Your family’s passports and other important documents like birth certificates, marriage certificates, property documentation (insurance, proof of address), wills and powers of attorney.
• An external hard drive or cloud storage with copies and photos of important documentation. The external hard drive should be stored somewhere separate from you and your property, such as with a friend, or even a bank or lawyer.
• Emergency plans and contacts for your family and pets
• First Aid Kit and medicines
• Non-perishable food and water supplies
• Soap, toilet paper, toothpaste and toothbrushes
• Torch

You may also want to keep some other personal items, like spare clothing, with your kit.

Measures to protect your property in the event of fire or flood can differ, and it’s worthwhile speaking to your state emergency services about what they recommend.

Some basics for fire suggested by the NSW SES include:

• Clearing your roof, gutters and around your property of loose leaf litter and branches.
• Repair damaged tiles
• Ensure hoses are long enough to reach around your property
• Install fine metal mesh screens on windows and doors
• Repair or cover gaps in external walls

You might also consider installing fire sprinklers in your gutters.

Some basics for flood suggested by the Department of Fire and Emergency Services WA include:

• Consider alternatives to carpet as floor coverings
• Install electricity sockets and power points above floor level
• Store chemicals and poisons above ground level
• Purchase emergency equipment, such as drinking water containers, fuel supplies, sandbags
• Relocate any items you would want protected in a flood to a higher level or alternative location
• Know where and how to turn off electricity, gas and water mains.

If you face an emergency, follow directions from emergency services, keep updated on evacuation points and be ready to evacuate if needed.

How insurers cover you

Insurers typically use investments alongside cash reserves to help manage their ability to service claims over time, but bear in mind they are operating with far vaster sums and the returns on their investments might cover replacing millions of houses in a year. Their investments will still be relatively defensive and income-generating.

As a quick example, in its FY25 report, Insurance Australia Group (ASX: IAG) reported that its shareholder fund was split 65% to fixed income and cash, 34.5% to equities, and 0.5% to alternatives. You’ll note the use of fixed income and cash to assist with managing the ability to pay claims as needed, while the equities would offer both dividends and the ability to help growth funds.

Outside of this, IAG also has a $75m venture capital fund called Firemark Ventures, which invests in start-ups that might materially affect how insurance works, such as its investment in Digital Agriculture Services that offers AI-powered rural, agri and climate risk intelligence.

If you want a closer understanding of what fixed income and cash investments might look like in an insurer’s portfolio, QBE’s latest half-year report offers more detail into how this might all look. Please note because of rounding, it doesn’t perfectly equal 100%.

Source: QBE Group Half Year Report 2025

Investing for disaster season

If you wanted to copy the insurers' approach – while still maintaining an insurance policy, this might look like adding in an emergency cash savings account and investments.

From an emergency cash savings perspective, investors could consider high-interest savings accounts to help build their money. They might also look at term deposits with the caveat of watching what the term is and monitoring rollover dates to avoid being unable to access money if it has automatically rolled into a new term. It can be valuable to set up automated savings transfers into your emergency fund to ensure it keeps growing over time.

An emergency cash fund might mean a separate cash account linked to your main account so that you don’t accidentally dip into it. It’s something to discuss with your bank to see what options they might suggest for you.

Investors need to be conscious that in an emergency, they’ll need to be able to access funds quickly, so tying all their spare cash in investments might make quick access to emergency funds difficult or near impossible in the event of an emergency.

Some investors might choose a combination of insurance, emergency cash and an investment portfolio.

Investing is not typically used as an emergency option for individual investors, for the reason that you generally invest for long-term goals, and it can be hard to instantly access funds in an emergency. You also don’t necessarily have access to the types of investments that insurers might have. You might instead choose to use investments to help increase your emergency funds alongside your existing cash reserve, this could simply be an additional goal and component of an existing portfolio.

What you would need to consider when investing to help bolster your emergency funds would be:

• A goal amount to invest for and a minimum timeframe for this. If under five years, focusing on building cash savings might suit your needs better. You never know when a disaster is going to hit, but if you live on a once-in-a-lifetime flood plain, you might have more flexibility than someone in a high-risk zone.
• Capital protection, a level of growth to manage inflation and liquidity of assets to access funds quickly if needed.
• A regular investment plan to keep the fund growing.

This could mean additional defensive investments in your existing portfolio, a greater allocation to liquid blue-chip investments or adjusting your existing regular investment plan upwards to factor for the additional emergency buffer. It’s worth discussing this with an expert to find out what this might look like for you and how you can incorporate it alongside your existing portfolio, as well as factoring in insurance and an emergency cash fund.

Ready for disaster season?

If you need extra help with your policy or planning for extra buffers in the form of savings and investments, it can help to talk to your insurer and seek expert advice on the options that might best suit your circumstances.

For other disaster needs, check in with your local and state emergency services and keep updated on changing conditions. Stay safe!