Home Insurance Premiums Surge Across Australia: What You Should Know

Homeowners across Australia are facing significantly higher costs for home and contents insurance. New analysis shows that premiums have increased in every state and territory compared to 2024, with some households paying up to $700 more per year for similar cover.

What’s Driving the Increase

Several factors are contributing to this surge in insurance costs. Inflation is pushing up the price of materials and labour, which makes repairing or rebuilding homes more expensive for insurers. The frequency and severity of severe weather events—storms, floods, cyclones—are also imposing heavy claims costs. To manage risk, insurance companies are increasing their reinsurance (the insurance insurers buy) premiums and passing those extra costs on to policyholders.

How Big Are the Increases

On average, home and contents insurance premiums jumped approximately 14% in the past year, which for many households means a rise of several hundred dollars annually. In some high-risk or high-cost regions, the rise has been steeper depending on exposure to environmental risk and local rebuilding costs.

Who Is Most Affected

Homeowners in areas prone to flooding, bushfires, or other natural disasters are bearing the brunt of the increase. Those who live in higher-risk zones are seeing substantially higher rate hikes because insurers are re-evaluating risk more strictly. Also, households with lower income or tighter budgets are more likely to experience affordability stress, meaning the rising premiums make it hard to maintain or renew suitable coverage.

Possible Ways to Reduce Costs

While premiums are rising, there are some strategies homeowners can use to mitigate the impact:

• Shop around: Different insurers offer different rates for similar policies. Some owners could save hundreds by switching.
• Review your risk factors: Improving your home’s resilience (such as reinforcing roof, installing flood barriers, etc.) or choosing a safer location can help lower premiums.
• Adjust policy details: Opting for higher excesses (the amount you pay before insurance kicks in), reducing cover for less essential items, or excluding very high-risk coverages (if feasible) may reduce costs.
• Stay informed about government or regulatory action: In some cases, state or federal initiatives (reinsurance pools, grants for resilience, tax relief) can help ease insurance cost burdens.

Broader Impacts and Things to Watch

This rise in insurance premiums is contributing noticeably to cost-of-living pressures for many Australians. For those with mortgages, fixed incomes, or near the edge of affordability, a bigger insurance bill can strain household budgets. The trend may also affect where people choose to buy homes or whether people carry full cover at all. Under-insurance becomes a real risk when policies are pared back or skipped.

Regulators, consumer advocacy groups, and the insurance industry are under pressure to increase transparency in how premiums are calculated. There is growing demand for clearer explanations from insurers about pricing, for better risk modelling, and for policy tools that support homeowners in high-risk areas.

What to Keep an Eye On

Over the coming months, homeowners should watch for how the following evolve:

• Changes in reinsurance costs globally, especially tied to climate-related events.
• Government responses, especially policies or incentives aimed at reducing risk or aiding affordability.
• How insurance companies model risk (for example flood maps, fire risk, climate projections) and how those models affect premiums.
• The market behaviour of insurers—whether competition brings some premium moderation, or whether dominant providers push higher rates.

Home insurance in Australia is becoming more expensive, driven by a mix of inflation, more frequent extreme weather, rising rebuild costs, and higher reinsurance. While this adds pressure to household budgets, there are actions homeowners can take—comparing providers, adjusting policies, improving home resilience—and policy makers have a role to play in ensuring insurance remains accessible. For many Australians, addressing these insurance cost increases will be an urgent financial issue.