Are “happy” Australians overlooking better home insurance deals due to loyalty?

Key Points

• 43% of Australians are satisfied with their current home and contents insurer.
• Switching insurers could save Australians an average of $870 each year.
• Sticking with the same insurer might feel safe, but exploring options could lead to big savings.

It’s great to feel secure with your home and contents insurance provider, but recent insights suggest that this sense of comfort might actually be holding many Australians back from saving a pretty penny. Our latest report sheds light on what we’re calling the "Policy Paradox"—a situation where feeling content with your insurer can lead to overlooking better, more affordable options that could make you even happier.

The ‘Policy Paradox’ explained

We dove deep into 162,088 insurance quotes and chatted with 1,265 Australians to discover that 43% of people are "happy" with their current insurers. While it’s nice to be satisfied, this contentment often means people aren’t bothering to shop around or switch policies, possibly leaving money on the table.

“At Mozo, we call this phenomenon the Policy Paradox,” explains Rachel Wastell, Mozo’s personal finance expert. “Many Australians feel secure with their insurer, but blind loyalty could be costing them peace of mind and money.”

Satisfaction doesn’t always mean savings

The report, “Exploring the Insurer Choices We Make,” uncovers a surprising gap between being happy with an insurer and actually saving money. Among those who are satisfied, one in three rarely or never compare policies. Relying solely on loyalty instead of actively hunting for better value can lead to noticeable financial losses.

Wastell adds, “With home and contents premiums jumping $288 on average in the past year, the price of not reviewing a policy is becoming more and more expensive. If you’re happy with your current provider, that’s great, but if you’re not shopping around you could be blind to potential savings.”

Rising premiums and consumer choices

The national average premium for home and contents insurance has climbed to $3,499, a 9% increase over the past year. Breaking it down by state, South Australia is the most wallet-friendly with an average premium of $2,053, followed by Western Australia at $2,421. On the flip side, folks in Queensland and the Northern Territory are paying more, with averages of $4,398 and $4,547 respectively, largely due to the higher risk of natural disasters in these areas.

Several factors play into these premium costs:

• Construction material: Concrete homes are hitting the highest premiums at an average of $4,506 annually, while double brick homes are a bit cheaper, averaging $2,932.
• Property value: If your home is valued over $800,000, expect premiums to soar above $4,800, compared to $3,493 for properties between $600,000 and $800,000.

Barriers to switching: why don’t consumers compare?

So, why aren’t more people switching insurers? Several hurdles stand in the way:

• Perceived complexity. Many think that switching policies is a hassle.
• Distrust of new providers. There’s a worry that unfamiliar insurers might not be as reliable or offer the same level of service.
• Fear of reduced coverage. People are concerned that cheaper policies might skimp on essential coverage.

Wastell offers some comfort, saying, “Switching isn’t as hard as it used to be. Many providers now offer streamlined processes and sign-up discounts, and Mozo’s tools can help you compare in just a few clicks.”

Mozo’s top tips for home & contents insurance

If you’re ready to break free from the Policy Paradox and snag a better deal, here are some handy tips:

• Compare annually. Even if you’re happy with your current policy, taking a yearly look around can help you find cheaper cover and new perks.
• Assess coverage and cost. Make sure your policy covers the risks you’re concerned about while also keeping an eye on the price to get the best bang for your buck.
• Explore non-traditional insurers. Don’t just stick to the big names. For example, Australia Post has been noted for offering solid, value-driven coverage.

By staying proactive and regularly checking out your insurance options, you can make sure you’re not leaving money on the table while still keeping the coverage you need.

To help you out, we’ve gathered some of our favourite home insurance providers below. If you see any you like, simply click through for your free quote.