Resilience rating explained: The new scheme that could lower your home insurance
Key takeaways
- A new "star rating" for home resilience will allow insurers to officially reward homeowners who disaster-proof their properties.
- The plan pushes for insurers to provide guaranteed lower premiums for homes that meet specific resilience standards or undergo retrofits.
- What's next: The coalition is calling for an immediate National Housing Resilience Accord to begin roll-outs of these ratings and financial incentives by 2027.
If you've opened your home insurance renewal recently and felt a pang of "premium shock," you're not alone.
New data from the Actuaries Institute shows 1.6 million Australian households are now in "insurance stress" and are spending more than a month's worth of income just to protect the roof over their heads.
To ease this financial strain among households, insurance firms and consumer advocates have banded together to propose a scheme called the National Risk and Resilience Rating System (NRRRS) under the Housing Resilience Action Plan 2030.
Under the scheme, households who take steps to make 'resilience upgrades' to their homes will be rewarded with cheaper premiums.
While it's unclear what exactly what's classified as a "household improvement", these modifications are a more strategic effort to ensure household longevity.
"We have houses in Australia that were not built for today's climate and certainly not built for the future climate, and the consequence of that is unaffordable insurance", explained principal at Finity Sharanjit Paddam.
"Resilience building actually helps protect your home so you don't suffer from the financial consequences."
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A more transparent approach to home insurance premiums
Wild weather patterns, rising construction costs and inflation are some of the key reasons why home insurance premiums have surged in recent years.
But given the notion that individual premiums vary, as they are risk-based, many homeowners are still left puzzled when their renewal notice comes through.
"People's premiums go up and there is just no information in their renewal notice about why. Nothing tailored to their individual risk, and no information about what they could do to make their homes safer," said Financial Rights Legal Centre senior policy and communications officer Julia Davis in a statement to the ABC.
While Aussie might not see a "resilience-rated" premium come into effect anytime soon, there is a way homeowners can take action rather than auto-renewing their policy.
If it's been years since you first took out home insurance, you could be missing out on a more competitive deal.
Finder's money expert Richard Whitten recently saved himself $779 by switching his contents insurance policy after 5 years of auto-renewals.
Don't just renew your policy this year, compare your options and switch to a better value policy today.
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