CHOICE has called for a standard definition of "fire" to prevent consumers from being left without insurance cover.
The consumer advocacy group raised the issue of "inconsistent" definitions in a submission to the Royal Commission into National Natural Disaster Arrangements.
"All home insurance policies that CHOICE reviews offer cover for bushfires - but there is no standard definition of 'fire'," the submission said.
"Some people end up with strong cover for most situations, others are left with unclear cover or less cover than they'd expect due to complex terms and conditions.
"For example, one major insurer excludes damage caused by 'heat, ash, soot and smoke when your home or contents have not caught on fire unless it is caused by a burning building within 10 metres of the insured address'.
"Other policies have no clear definition of fire or exclude instances where damage is caused but flame isn't directly present, ruling out support for people whose properties are affected by ash, soot or extreme heat."
The group said "there is no reason for differing definitions of 'fire' within insurance policies".
"This is not the case for other forms of natural disasters, such as flood," the submission said.
The group suggested short and medium-term actions to protect Australian consumers.
"Consumers need certainty about what they are covered for when making an insurance claim," the submission said.
"The government can provide this by: Immediately mandating a standard definition of fire, similar to the mandated definition of flood in the Insurance Contracts Regulations 2017.
"This simple legislative reform would provide immediate certainty for consumers.
"Progressing reform to introduce standard terms for all major events in insurance contracts."
The Royal Commission team is due to deliver its findings by October 28.
Visit the CHOICE website to read more about bushfire insurance cover.