Australian bushfire victims may face insurance crisis

Victims of the ongoing Australian bushfire crisis may have a second battle on their hands as it emerges many of them are under-covered.

To date, 5,259 insurance claims have been made as a result of the fires, costing insurers about $321 million.

The Insurance Council of Australia (ICA) estimates that four in five home owners in fire-affected areas won't be able to resume their normal standard of living if their property was destroyed because they didn't have enough cover.

Only 5 per cent of properties destroyed by fire have been assessed by insurers due to high levels of danger and catastrophic weather conditions.

Insurer IAG says it expects to pay out roughly $400 million in natural peril claims for the six months to December 31, more than half of its $641 million natural peril allowance for the fiscal year.

The insurance giant said it had received over 2,800 bushfire related claims since the beginning of September, mostly related to residential properties, including 1,500 claims since the start of December.

With 32.5 per cent of its bushfire claims covered by reinsurance, IAG estimates that the three ongoing Australian bushfires will cost it roughly $160 million in claims.