Over the last few years, Australia has been flogged with natural disasters like floods and bushfires. On top of this, we've seen inflation pressures also impact the cost of insurance. With global warming issues and inflation combined, we're left with somewhat of a perfect storm that creates skyrocketing insurance premiums.
So, what do we know about Aussies and their home insurance?
The rising cost of home insurance in Australia
According to the Insurance Council of Australia, building insurance has increased by an average of 13.9% in the 12 months since Q1 of 2023. That's on top of the 14.1% increase that occurred in the 12 months since Q1 of 2022.
How Australians understand their home insurance policy
Despite the cost of home insurance skyrocketing in recent years, many Australians are paying for it without knowing what it even covers.
In July 2023, Finder conducted a nationally representative survey of over 1,000 Australians and found that almost a third of Australians with home insurance don't understand the benefits and inclusions of their policy. Women were more likely than men to say they don't understand the benefits of their policy.
Home insurance and underinsurance
Underinsurance is when you don't have enough insurance to cover the cost of all you need to replace. With the rising cost of living, this is becoming really common in Australia as people are wanting to reduce the cost of their insurance by reducing the total sum covered. At the same time, building and materials costs are going up, making rebuild costs more expensive.
According to Finder research, almost one fifth (18%) of people surveyed had not updated the value of their home on their insurance policy in over 2 years. Alarmingly, over one tenth (12%) of people surveyed have never updated their policy at all.
Home insurance and the loyalty tax
In August 2023, we asked over 600 Australians when the last time was that they switched home insurance brands. A whopping 42% of respondents told us they'd never switched before. In fact, only 3% of respondents had switched recently in the last 3-6 months.
Contrary to popular belief, loyalty does not pay. In fact, if you haven't switched providers since your last renewal, you're likely paying more than you need to. We call this the loyalty tax — that's because the longer you stay loyal to an insurer, the more they charge you at renewal time. Your premiums will keep on going up until you either question them about it or switch altogether.
Switch and save
"In a cost of living crisis, every cent matters. Many are quick to ditch the things they enjoy; a takeaway coffee or a hair appointment. But realistically, the biggest savings can be found in the boring bills you've set to auto-pay, like your home insurance. Your renewal notice is not some kind of sealed fate. You can compare your options and find a cheaper solution. I've done this myself and managed to save over $200. You best believe I'll be doing it again when my home insurance is next up for renewal."
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