A crisis of underinsurance threatens to scar rural Australia permanently ... For example, a woman who lost her home in Kinglake, northeast of Melbourne, in the 2009 fires, told us how her insurance calculations turned out to bear no resemblance to the actual cost of rebuilding.
"You think okay, this is what I paid for the property," she said. "I think we had about $550,000 on the house, and the contents was maybe $120,000."
It was on these estimates that she and her partner took out insurance. She told us:
    You think sure, yeah, I can rebuild my life with that much money. But nowhere near. Not even close. We wound up with a $700,000 mortgage at the end of rebuilding.
A common issue is that people insure based on their home's market value. But rebuilding is often more expensive.
For one thing there's the need to comply with new building codes, which have been improved to ensure buildings take into account their potential exposure to bushfire ...

Underinsurance significantly increases the chances those who lose their homes will move away and never return — hampering social recovery and resilience. Residents that cannot afford to rebuild will sell their property, with "tree changers" the most likely buyers.
Communities not only lose residents with local knowledge and important skills but also social cohesion.
Research in both Australia and the US suggested this can leave those communities less prepared for future disasters.
This is because a sense of community is vital to individuals' willingness and ability to prepare for and act in a threat situation. A confidence that others will weigh in to help in turn increases people's confidence and ability to prepare and act.
In Whittlesea, for example, residents reported a change in their sense of community cohesion after the Black Saturday fires.
"The newer people coming in," one interviewee told us, "aren't invested like the older people are in the community." ...

For readers outside Australia, a nation of 25m has higher housing costs than one with 327m people, tho our house prices are thru the roof, pricing many people out of home ownership.