Section 28 of the Rural Fires Act 1989 (NSW) says:

(1) Any damage to property that is caused by any person exercising any function conferred by or under this Division in good faith and any remedial work necessary to rectify damage to the environment is to be taken to be damage by fire within the meaning of any policy of insurance against fire covering the property so damaged.

(2) Any provision, stipulation, covenant or condition in any agreement that negates, limits or modifies or purports to negate, limit or modify the operation of this section is void and of no effect.

Today’s correspondent asks whether this is ‘… a dead-end piece of legislation?’ They say:

We had a bushfire originate on our property October 2019 which turned into a major bushfire. About 10 days after the start of the fire there was a windy day which fanned up the fire still on our property which then jumped a containment line. To make a long story short about a week and a half later I found that RFS had pushed a one-way containment line from a neighbour’s property up a very steep slope to a ridge top on a remote peak then along the ridge top for some distance. 

This containment line is now a major erosion problem. We made an insurance claim under s 28 [relying on ‘any remedial work necessary to rectify damage to the environment is to be taken to be damage by fire’] which was denied as we did not have fire insurance over the property so damaged. It seems for s 28 to be relevant one needs fire insurance cover over the bush itself and the mountain! And according to our insurance broker there is no such insurance policy available, nor is there is a policy of insurance available for environmental damage by RFS.

Our farm insurance contract has those items listed for which we have purchased insurance cover. By the PDS our farm insurance policy covers events of fire. Therefore might the farm insurance policy itself provide a basis to make an insurance claim under s 28?

The first part of s 28(1) says, in short, if the RFS causes damage, that is deemed to be damage done by fire. If the RFS light a backburn and it burns out a property that is damage done by fire, not deemed to be done by fire. But if the RFS cut a fence or build a fire break with a bulldozer across private property then that damage is not caused by fire but it is deemed to be caused by a fire – that is it will be treated as if it was caused by fire even though it was not.

The second part of s 28(1) says that if there is environmental damage caused by fire the cost of rectifying that damage is to be considered part of the fire damage and must therefore be covered by the damage. The second part of s 28(1) is not completely clear. It does not say that the ‘environmental damage’ must have been caused by the RFS, or ‘any person exercising any function conferred by or under this Division’ nor does it say that the damage must be caused by fire. It cannot, however, mean ‘any remedial work necessary to rectify damage to the environment’ regardless of how the damage was caused. The second part of s 28(1) must I suggest be at least limited to damage by fire and more likely to remediating damage to the environment caused by firefighting efforts. Regardless of the possible limits of s 28(1) given my correspondent says that the damage they are dealing with is erosion which was caused by the firefighting efforts of the RFS, I will assume that it falls within s 28.

Section 28 says that the damage and the remediation costs are to be covered by an insurance policy that covers the damaged property against loss by fire. The test is to ask ‘if this damage was caused by a naturally occurring bushfire, would I be covered for the losses?’ If the answer to that question is ‘yes’ then you will also be covered for losses caused by the RFS and for remediation work. If the answer is ‘no’ then loss by fire is your loss and this damage is also your loss. It follows that indeed ‘for s 28 to be relevant one needs fire insurance cover over the’ property that is damaged. If you have insurance that covers pastures but not bushland then damage to the pasture is covered, damage to the bushland is not.

If a ‘farm insurance policy covers [losses due to] fire’ then it also covers the losses that fall within s 28.  I think that is what is meant by ‘might the farm insurance policy itself provide a basis to make an insurance claim under s 28?’  Section 28 does not create an independent source of compensation, it extends the definition of ‘fire’ in any fire insurance policy to include damage caused by, and remedial action required as a result of, the actions of the RFS. Section 28(2) makes it clear that insurance companies cannot ‘get out’ of that extended definition – they cannot contract out of s 28(1).

Conclusion

If you have an insurance policy that covers an asset from loss by fire, that asset is also insured against damage done by the RFS (or more accurately, by ‘any person exercising any function conferred by or under this Division in good faith’) and for the cost of remediating environmental damage. The first step in applying s 28 is to look at one’s own insurance policy and see that property is insured against loss by fire. That property is also insured against the risks set out in s 28. If the property is not insured against loss by fire (and that may be ‘the bush itself and the mountain’) then s 28 provides no assistance.