How much does Home Insurance cost?

What is Home Insurance and what can it cover? 

Home Insurance, sometimes known as Building Insurance, is a safety net for what might well be your most important asset – your home. It can help cover the costs of repairing or rebuilding your home if it’s damaged or destroyed by what the suits call an ‘insured event’.  

So, what on earth is an insured event? Well, it really depends on the terms of your specific policy. One insurer might cover you for floods while another might exclude it altogether. That’s why it’s important to read your policy’s Product Disclosure Statement (PDS); it goes into detail about every event that’s covered (and importantly, those that aren’t) 

Yes, many policies will cover damage from storms, fires, vandalism, earthquakes, lightning and explosions, but you don’t want to assume it’s a given. So if you’ve got your eye on a certain insurer’s policy, give the PDS on their website a quick read beforehand. It’ll give you a good idea of exactly what you’re getting! 
 

How much will Home Insurance cost me?

Okay, let’s get down to business. In 2022–23, iSelect customers spent an average of $1,177 per year on Home Insurance. People who took out just Contents Insurance spent an annual average of $435, and people taking out combined Home and Contents Insurance spent $1,488 for the year. 

Of course, the exact amount will depend on specific factors about your home and level of coverage. A big factor is location. For instance, areas with a history of highly destructive weather are a lot riskier to insure – so it’s no surprise that they’re also more expensive to insure. 

What else determines Home Insurance cost? 

The price tag on Home Insurance isn’t just a matter of location. There are a lot of different ingredients that go into that particular recipe, such as: 

• Type of cover: A ‘sum-insured’ policy will provide cover up to a certain amount, an agreed-upon sum between you and your insurer. It’s usually cheaper than a ‘total replacement’ policy, which covers the costs of rebuilding your house to the same standard.  
• Optional cover: Some Home Insurance policies offer protection against things like floods, accidental damage or defaulting tenants as optional extras. Just be aware – these optional extras will usually raise the cost of your premiums. 
• Security features: Having an alarm system, deadlocked doors, security doors and key lock windows can all help to keep your place safe, and therefore can often lower the price of your premiums. 
• Age and features of the home: A new, well-maintained home might cost less to insure than an older home. At the same time, the materials used to build the house can also affect the premium. 
• Claim history: If you’ve made previous claims on Home Insurance, this can indicate that your property is at higher risk of damage. On the flip side, if you have good claim history, then you might be able to avoid paying higher premiums. 

Why has the cost of Home Insurance risen? 

Home Insurance premiums saw a pretty sharp rise in 2022–23. And, as you might already suspect, inflation was the main culprit, along with a rise in extreme weather. 

Inflation affected everything from fuel prices to building materials, making the cost of rebuilding much more expensive. This has a knock-on effect: insurers have to raise their premiums in order to cover the increased cost of repairs and rebuilding. 

Some of these changes were due to supply chain disruptions during the early years of COVID-19. The good news is that, with supply chains returning to normal, the cost of building materials has largely stabilised. 

So what does this mean for Home Insurance premiums? Well, it’s hard to say whether or not they’ll keep rising at the same rate. Less inflation in building costs is certainly going to help, but the rise in the number of natural disasters around Australia is still driving up premiums, particularly in flood-prone areas. 

What happens if I’m underinsured?

Underinsurance is a common problem in Australia. It happens when you don’t take out a big enough insurance sum to cover your home for the full cost of rebuilding. 

Essentially? If you’re underinsured, you might have to pay a significant amount of the repair costs from your own pocket – even if your claim is successful. 

Avoiding underinsurance is also easier said than done. You can get an estimate of your rebuilding costs from online tools and calculators, or ask a local builder for the average building rates in your area, but even these figures might not be perfect. 

If you’re looking at a sum-insured policy, it could be safer to ask for what’s called a sum-insured safeguard or safety net. This gives you something of a safety net in the event of a total loss; the insurer usually adds a percentage of the total sum insured to your claim amount, so you get a little bit of extra cover.  

How can I keep my Home Insurance costs low?

Fortunately, there are a few things you can do to reduce the cost of your premiums. For example, you might: 

1. Keep your home secured: A home with a bit of added security can attract lower premiums. Installing security screens, alarms and deadlocks for your doors and windows can go a long way here. So, let your insurer know about your setup and see whether it can shave a bit off the costs! 
2. Pick a higher excess: This one’s a bit of a trade-off. An excess is the amount you agree to pay whenever you make a claim, and choosing a higher excess might also mean lower premiums. You’re basically choosing to pay a bit more at claim time to pay a bit less on your regular premiums.
3. Compare policies: You’ve got lots of different insurers competing for your business – and some will offer cheaper policies than others. Of course, you should also make sure that you’re getting adequate coverage, but comparing policies can still be a great way to find the best fit for your needs and your budget. 

Where can I compare Home and Contents Insurance Policies? 

Instead of looking up every insurer and drawing up a list of the different policies they offer, there’s an easier way to compare Home and Contents Insurance.  

With iSelect, you can compare policies in a few clicks.* The different premiums and features of each policy are placed side by side so that you can weigh them up at a glance. So give it a whirl and take the stress out of finding Home Insurance. Or better yet, give our friendly team a call on 13 19 20 if you’d prefer to talk it out with someone.