It is after extreme weather events that people’s lack of insurance is particularly distressing. But simply telling people to get more insurance is not necessarily the answer. We first need to understand why people are underinsured and work out how insurance can work better for people.

More than 70 homes weredestroyed by bushfiresin Western Australia this week, leaving those affected facing enormous costs. After disasters like these, insurance is not always there as needed or as expected.

In Australia,where one in six children live in poverty, significant rates of underinsurance entrench disadvantage and hardship. This dynamic will worsen as the consequences ofunmitigated climate changeunfold.

Up to 10% of homeownersor mortgagees are without home insurance and about40% of rentersare without contents insurance. Underinsurance can make a bad situation worse, and make it harderto get back to normal after a disaster.

Our national research suggests simply telling people to getmore insurance is not necessarily the answer. To understand that, we need ask_why_people are underinsured.

A lot of underinsurance is by accident rather than design. After being burnt out by Victorias Black Saturday bushfires in 2009, one of our interviewees, Bridget*, told us:

You think okay, this is what I paid for the property [] I reckon I could rebuild it for X [] I think we had about A$550,000 on the house, and the contents was maybe $120,000 [] 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.

It is hard for people toaccurately calculate repair or rebuild costs. Risks are uncertain, insurers have complex rules, and online calculators come with their own fine print.

Renters are at risk of underinsurance as they tend toforego contents insurance, though the building itself will probably be insured by the landlord.

Following the Hobart floods in 2018, one of our interviewees, John, was without contents insurance when his rented home was flooded. He told us:

We were wondering about temporary accommodation, whether they would put us up until we found a new place to live [] They said that that was under contents insurance, which was our responsibility, and the house insurance just covers the house.

Lack of trust

If you are on a lower income, you are more likely to be underinsured. Sandra, who lives in a bushfire-prone area, described to us herdecision-making when buying insurance on a limited budgetby saying:

The contents is insured to $20,000 Weve got a lot of irreplaceable stuff here and a lot of equipment of value the value is going to be far more than that. But I just hope that wed have like a small kitty that would be like $20,000. I gured would be enough to replace just the essential items.

Rosalie and her family livewithout any house and contents insurance:

Just the way they (insurers) word things [] theyre trying to make sure they exclude certain things, and while we sort of fall within the parameters of whats included, I have a feeling that theyll go, oh no, youve got a dingle on your dangle and its just not included.

Alack of trust in insurersmay be based on previous experience of an insurance claim not coming through as expected, or in political perspectives questioning the power of large corporations.

More insurance not straightforward solution

More insurance may help renters and home owners. But to decide_how much more_, you need access to accurate rebuild or valuation costs. Accessing, understanding and keeping up to date with complex knowledge about risk and construction is beyond the capacities of many who already live busy lives. And to make decisions about contents insurance, renters need capacity and time to understand the risks of being an underinsured renter.

Simply encouraging people to get more insurance doesnt help people like Sandra, who are on a limited budget, nor will it tackle distrust of insurers.

Instead of telling people to buy more of the right type of insurance, we should be asking how insurance can work better for people.

Making insurance work

Insurance spreads costs and risks across populations; it recognises shared interests can create shared benefits. Maintaining the public benefit of insurance includes making it more equitable through government regulation and consumer demand.

Insurance should remain about the equitable distribution of costs and risks so everyone has a safety net if disaster strikes.

We must resist the trend towardsinsurance products that are tailoredin response to individual characteristics and risks. This individualisation favours those with higher incomes and lower levels of risk, and marginalises disadvantaged populations living with higher risk. In other words, it puts insurance out of reach for those most likely to need it.

Governments should not view insurance as_the_key disaster recovery tool, and must not rely on individuals to manage their own risks with insurance.

Insurance is only one toolin disaster preparedness and recovery. Others including building code reform, effective land-use planning, and a well-funded social safety net require strong government leadership.

In a changing climate, governments must recognise we are all in this together. Telling people Well, you should have been insured when there are so many reasons why someone might be underinsured is unhelpful, unfair, divisive and allows governments to shirk their responsibilities toward all citizens.

This article, first published in The Conversation, was written by Kate Isabel Booth,senior lecturer in Human Geography and Planning, University of Tasmania; Chloe Lucas, research fellow, Geography, Planning and Spatial Sciences, University of Tasmania; Christine Eriksen, senior researcher, Swiss Federal Institute of Technology Zurich