Aussies bail on home insurance as natural disasters increase costs

Key points:

• The average Australian home insurance premium costs $1,460 per year
• Bushfire and flood-prone areas hit hardest by price hikes 
  
• Over half of Australians feel like their finances are out of control

The cost of home insurance is on the rise and Australians in natural-disaster-prone areas are facing the brunt of the pressure, even resorting to canning their policies altogether. 

New data from Mozo found Australians whose home insurance policy premiums have risen are paying $316 more on average than last year, after the average cost rose by up to 30-40%.

According to Mozo, the average Australian home insurance premium weighs in at $1,460 per year. Queenslanders reportedly fork out the most, at $1,692 per year on average – $348 more than they paid in 2022. 

Bushfire and flood-prone areas hit hardest by price hikes 

Almost 2 in 5 Australians who cancelled their home insurance policy in the last 12 months, due to the rising cost of coverage live in areas affected by natural disasters. 

Those in bushfire-affected areas were the most likely to report their home insurance premiums had increased (42%), followed by those in flood-affected areas (32%). 

The data shows that, for bushfire and flood-affected customers, home insurance premiums rose by more than 30% on average over the last 12 months.

Those choosing not to cancel also run the risk of underinsurance 

Mozo money expert Rachel Wastell says that customers choosing not to cancel their policies still need to do their due diligence, making sure they aren’t at risk of underinsurance. 

“The amount of Australians that have resorted to cancelling their home insurance because they can’t afford it is shocking,” she said, “but what’s more concerning is many are likely paying these rising premiums without realising they’re underinsured.”

“If you’re living in a natural disaster-affected area, and you’re paying for home insurance, you should double-check that you’re fully covered. 

“The cost of construction has skyrocketed over the past five years, so if you haven’t reviewed your existing levels of cover, look at what insurers call the “sum insured” before the bushfire season takes hold,” Wastell continued.

“We are in an El Nīno season, which means the likelihood of bushfires over summer is high, so you want to be sure your home insurance covers both the rebuild of your home and any structures or equipment you have on the property.”

Over half of Australians feel like their finances are out of control, some choose to ignore it 

The research also found that more than half of Australians (62%) feel like their expenses are “out of control”, with an unsurprising 9 out of 10 saying they are concerned about the rising cost of home insurance in this country. 

And yet, 1 in 6 surveyed said they’re simply “trying to ignore it”. 

Wastell says that facing your personal finance woes head-on could leave you better off than burying your head in the sand – especially in relation to rising home insurance premiums.  

“Australians should think twice before approaching the rising cost of premiums with a 'she’ll be right' mentality, as burying your head in the sand can be costly,” she said. 

“No matter where you live in Australia, you’re likely paying hundreds of dollars more to insure your home than you were last year, so if you haven’t shopped around for a better deal now is the time to do so.” 

The Mozo Experts Choice Awards for Home Insurance recognise the best home insurance policies in 2023, awarding those offering high-quality coverage and those considered the best value for money.