NSW home insurance premiums set to hike after levy increase
More than 10,000 policyholders could end up dropping their cover as a result.
The NSW government has announced a $160 million increase to the Emergency Services Levy to give firefighters easier access to workers compensation entitlements – a cost that will ultimately be passed on to those with home and contents insurance policies.
In New South Wales, the government pays 14.6% of the cost of emergency services and the rest is funded through the Emergency Services Levy (ESL). The large majority of that is shouldered by home insurance companies, who then pass that onto their policyholders.
Insurance Council of Australia spokesman Campbell Fuller told the Sydney Morning Herald he expects a 15.2% increase in the ESL component of home insurance policies when the new levy contributions kick in from July 2019.
He went on to predict that these increases would lead 2,000 homeowners to drop their residential building insurance and an additional 9,000 to axe their contents insurance.
"It will hurt consumer and small business finances and it will be detrimental to the levels of non-insured and under-insured in the community," he told the Herald.
This is just the latest in a long saga regarding emergency funding sources. Insurance companies would rather see the ESL scrapped altogether in favour of an entirely different system. In fact, this was all set to happen in 2017 when the government approved a system that would see emergency services funded by all property owners rather than insurance companies.
However, the government faced a strong backlash after it was revealed how much some property owners would have to pay under that proposed system.
Who will be affected?
ESL can be charged on several types of general insurance policies including:
- Residential building and contents insurance
- Commercial property insurance
- Car insurance
- Marine insurance
However, residential and commercial property policyholders shoulder most of the costs. These costs must be itemized separately on your policy so you'll be able to see how much you are paying.
To counteract any potential increase in premiums, you can often find a better deal by comparing policies and keeping your eye out for discounts. After all, switching insurers has been shown to save you money versus renewing an existing policy.