Insure against natural disasters and climate change

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I've always wanted to live in the bush and from time to time I look at properties. But my husband has changed his mind because of climate change.

He reckons we would be too exposed to unstable weather that could result in bushfires.

He has a point. After all, we have just been through the hottest summer on record, the hottest January on record and the hottest day on record for Australia as a whole.

There were bushfires in every state and territory, as well as daily rainfall records and major flooding. Over 90 days, 123 extreme weather records were broken. As well, we have two relatives who have lost their homes to bushfires.

Certainly climate change means particular sorts of real estate need to be weighed up carefully.

Areas that are susceptible to flooding or bushfires or coastal erosion, sea surges and rising sea levels are riskier. Buying on a flood plain may have not been a concern during several years of drought, but the floods of the past few years have changed that.

Coastal property is vulnerable to extreme weather.

According to a 2011 report by the Department of Climate Change, there are between 187,000 and 274,000 residential buildings exposed to the combined impact of inundation and shoreline recession at a sea level rise of 1.1 metres.

Queensland and NSW have the most residential buildings exposed to a sea level rise of 1.1 metres, with between 44,000 and 68,000 residential buildings at risk in each state. There are also significant numbers of buildings exposed in Victoria and South Australia (31,000 to 48,000 in each state), WA (20,000 to 30,000) and Tasmania (12,000 to 15,000).

If you have bought in an area that is at risk, selling after a recent climate event will affect the price. So it is important to time the sale of your property. If you want to stay there you may need to modify your home to cope with natural disasters.

You should also check that you have adequate home and contents insurance cover. Unfortunately, the risks of storm surge, coastal erosion and gradual sea level rise are excluded by many general insurance policies in Australia.

If you are covered for floods or bushfires, read the fine print carefully. After only 3% of household policies contained flood insurance in 2006, nearly 80% now have it, according to the Insurance Council of Australia.

Flood cover may be available, but the cost can be prohibitive.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.