(Last Updated May 2025)
Don’t Rely Solely on Insurance
Insurance is important – if you can get it and afford it – but it’s not a guarantee you’ll be made whole. Payouts take time, claims can be knocked back on technicalities, and you might be underinsured without realising it. After the 2022 east coast floods, it emerged that nearly two-thirds of Lismore residents had no home insurance at all at the time. Many couldn’t afford the premiums. One Lismore shopkeeper, Adam B, had been quoted a $70,000 annual premium for flood cover – far out of reach. He rolled the dice and went without; when the record-breaking flood hit (two metres higher than any before), he was left with $500,000 in uninsured losses.
Even if you do have a policy, check it carefully. Are you covered for flash floods or just storm water? Is your sum-insured enough to rebuild at today’s soaring construction costs? (Building material prices jumped by double digits in recent years, meaning a rebuild can cost far more than when you first insured.) Update your cover limits annually to match current local building rates. And know that insurers often cap emergency accommodation payouts – if rebuilding takes a year but your policy covers six months of rent, you’ll need a plan for the gap.
Most critically, recognise that insurance money won’t flow immediately. After a disaster, assessors are inundated and payouts can take weeks or months. In the meantime, you still need to feed the family, pay for somewhere to stay, and replace basics. This is where your own financial preparedness kicks in.
Build a Cash Buffer for Crisis Times
Cash is king in a crisis. It’s not a cliché; it’s reality. When floods knocked out power and telco lines, we saw banks helicopter physical cash into Lismore because local ATMs were destroyed. Digital payments can fail in a disaster, so having a stash of actual banknotes can be a lifesaver. But beyond the immediate outage scenario, you need an emergency fund for the unpredictable expenses and income gaps that follow a disaster.
How much? Traditional wisdom says three to six months’ worth of expenses in an emergency fund. That’s a great goal, but let’s be realistic: many Australians are struggling to save anything at all. A recent survey found 1 in 3 Aussies have zero emergency savings – not a dollar set aside. The average person had about $12,000 in rainy-day funds, but that average hides the fact that millions have far less. So start where you can. Even $500 to $1,000 stashed away can make a huge difference when you’re living paycheque to paycheque. It could cover a few nights in a motel or a replacement fridge or simply fuel and groceries when you’re cut off from income.
To build this buffer, automate it. Skim a little from each pay into a separate high-interest savings account (one you won’t dip into for everyday whims). Treat it like a bill to your future self. Some folks round up transactions into savings; others throw in tax refunds or bonuses. Every bit counts. A young family in cyclone-prone Townsville who managed to save $50 a week by cutting takeaways – in a year they amassed about $2,500, which proved enough to get them through a month off work after a cyclone damaged their shop.
Where to keep your emergency money? A two-part strategy works best. Keep the bulk of it accessible in a bank account (online savings or an offset account if you have a mortgage – just ensure you can withdraw quickly). Then keep a portion in cash at home for when electronic access fails. I suggest a few hundred dollars in mixed notes: small bills ($20s, $50s) for buying essentials if EFTPOS is down. Store it somewhere safe and disaster-proof – a waterproof ziplock in your grab-and-go kit, or even a fire-rated safe. (During the Black Summer bushfires, one savvy retiree had a safe bolted in his garage with $1,000 in cash; his house burned down, but that safe and cash survived the inferno – money he lived on until the insurance came through.)
One more tip: spread your risk. If all your money is in one bank, and that bank’s network goes offline, you’re stuck. Consider keeping a secondary account with another institution (even one of the “big four” if you usually use a smaller bank), or a credit union account with a debit card. In a disaster zone, certain bank branches or ATMs might recover faster than others. Diversifying where you can access cash is like diversifying an investment – it adds resilience.
Prepare for Relocation and Housing Shocks
When a disaster forces you out of home, relocation can quickly become your biggest expense. After the 2022 floods, more than 4,000 Northern Rivers homes were deemed uninhabitable. Thousands of families suddenly needed somewhere else to live. The result? Overflowing motels, couch-surfing, even tent cities – and a surge in rental demand. With so many homes wiped out, vacancy rates plummet and rents in surrounding areas can skyrocket. (Nationwide, advertised rents jumped at a record pace of over 15% in 2024, and disaster-hit regions often fare even worse as housing supply shrinks overnight.)
Imagine this scenario: You’re living near the bush and a bushfire runs through your area. You’re safe, but your house isn’t. You need to rent a place for six months while rebuilding. You’ll likely be paying today’s inflated rent – perhaps 20-30% higher than a year ago – and you’ll need bond and advance rent upfront. If you already had a tight budget, this is a massive strain. For renters, it’s just as tough: you may have lost all your belongings and now have to compete for a new lease in a market with virtually no vacancies.
Action plan? Anticipate relocation costs in your emergency fund. In addition to the generic “3-6 months expenses,” earmark some savings specifically for housing needs. Think in terms of: If I had to leave home for a month, what would it cost? Budget for a couple weeks in a motel or holiday park cabin (prices often surge in crises, so be generous in your estimate), a rental bond (usually 4 weeks’ rent) and moving costs (truck hire, fuel, storage). For example, if rents in your area are $500/week, set aside $2,000 for bond, plus maybe $1,000 for immediate accommodation and $500 for misc expenses. These aren’t exact figures, but having something beats scrambling with credit cards later.