Victorian Bushfire Reconstruction and Recovery Authority Chairman Christine Nixon has identified underinsurance as a key lesson in the wake of the February 7 Black Saturday disaster.

Speaking at the Financial Planning Association’s national conference in Melbourne last week, Ms Nixon said 25% of those affected by Black Saturday weren’t insured. Even where insurance was in place, 80% were underinsured, with small businesses particularly exposed.

“Many small businesses had no insurance at all,” Ms Nixon said, recalling one case where $3 million in assets was lost.

Where insurance was in place, it has greatly aided the recovery of people affected by the catastrophic fires, which killed 173 people and destroyed 2029 homes. “I do know how much easier it has made it for people,” she said.

Ms Nixon says almost all policyholders have opted for a cash settlement from their insurers. Both insured and uninsured residents of affected communities have further recourse to the Victorian Bushfire Appeal Fund, which collected $388 million following the disaster.

Some 80% of those funds were directed to individuals and families while 20% is earmarked for community projects.

Ms Nixon says the rebuilding effort will aim to improve on previous facilities where possible.