Insurance premiums continue to outpace inflation, but consumers who automatically accept the higher premium quoted in their annual renewal notices risk paying more than they should.
Figures from the Insurance Council of Australia (ICA) show home building insurance premiums increased by 13.9 per cent in the year to March 2024, followed by comprehensive motor vehicle insurance at 12.7 per cent and home contents at 3.7 per cent.
Premiums are rising as vehicle repair and building costs rise.Credit: Luis Ascui
A spokesperson for the ICA says escalating costs of natural disasters and the increasing value of homes and vehicles that make them more expensive to replace, as well as higher building and vehicle repair costs, are behind the premium rises.
It comes at a time when many are feeling cost-of-living pressures – whether it is power bills, medical bills, or those everyday expenses like food.
There is every chance your next renewal notice will be higher, even if you have not claimed, says Adrian Taylor, executive general manager for general insurance at Compare the Market. You should not simply accept auto-renewals from insurers, he says.
Ensure you compare it against others on the market, paying attention to the sum insured, excess and any optional cover you may have. One way homeowners could keep their insurance premiums down is by increasing their “excess” – the amount of out-of-pocket costs in the event of a claim.
A freestanding house in Spring Hill in Queensland with an estimated cost of $750,000 to rebuild would see a reduction in the annual premium of 14 per cent if the excess on home and contents insurance was increased from $750 to $1500, research by Compare the Market shows.
“Some insurers also provide options of an excess upwards of $5,000, which could deliver even more savings,” Taylor says.
He says you should consider some of the lesser-known insurers who are often backed by well-known underwriters.