Why Home Insurance Costs Are Rising in 2026 — And How to Beat Them

Australian homeowners are facing a harsh reality: home insurance premiums have surged by 14% in the past year alone — the steepest rise in over a decade. For many households, this translates to hundreds of extra dollars annually, with some regions experiencing increases of 30% or more.

But here’s the good news: there are proven strategies to fight back against rising premiums without compromising your coverage. This guide breaks down exactly why costs are climbing and gives you actionable steps to reduce your premium.

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The Numbers: How Bad Is It Really?

Let’s look at the hard data on Australian home insurance in 2026:

Key insight: 1.61 million Australian households (15% of the total) are now experiencing “extreme insurance stress” — defined as paying more than four weeks’ gross household income for a policy.

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Why Are Premiums Rising? The 5 Key Drivers

1. Natural Disasters Are Getting Worse

Australia’s weather is becoming more extreme, and insurers are paying the price:

• Weather-related insured losses exceeded $7 billion in 2022 alone
• Catastrophic event claims have risen 50% in the past five years
• Climate experts project costs to grow from $4 billion to $8.7 billion annually by 2050

The 2022 NSW floods, Black Summer bushfires, and recent Cyclone Alfred have all contributed to mounting insurer losses that get passed on to policyholders.

2. Rebuild Costs Have Skyrocketed

Even if your home isn’t damaged, you’re paying more because:

• Labour shortages in the construction industry have pushed tradesperson costs up
• Material costs for timber, steel, and concrete have increased significantly
• Supply chain disruptions continue to affect building materials

When it costs more to rebuild homes after disasters, insurers increase premiums for everyone.

3. More Granular Risk Pricing

Insurers now use sophisticated address-level risk modelling:

• Each property gets an individual flood, storm, bushfire, and cyclone risk score
• Two houses on the same street can have vastly different premiums
• Properties in newly identified risk zones face sudden premium spikes

4. Reinsurance Costs Are Rising

Insurance companies buy their own insurance (reinsurance) to protect against major disasters. Global reinsurance costs have risen sharply, and these costs flow through to your premium.

5. Inflation and Profit Margins

ASIC Commissioner Alan Kirkland noted: “If insurers are using cost inflation as a reason to justify premium increases, then the opposite should apply. If inflation moderates, then consumers have a right to expect the rate of increase in premiums will reduce.”

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Regional Breakdown: Where Premiums Hurt Most

Home insurance costs vary dramatically across Australia:

The Cyclone Zone Reality

For properties in cyclone-prone areas:

• Homes in the highest risk bands pay premiums 2.5x higher than southern cities
• Some properties face premiums exceeding $30,000 annually
• The government’s Cyclone Reinsurance Pool has reduced high-risk premiums by 20%+, but affordability concerns remain

The Flood Zone Problem

Flood risk creates the most dramatic premium variations:

• Only 3-5% of Australian properties have high riverine flood risk
• But these properties face premiums that have quadrupled since 2004
• In the 2022 NSW floods, 90% of Allianz customers in high-risk areas had no flood coverage

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12 Proven Strategies to Reduce Your Premium

Strategy 1: Shop Around Every Year

Potential savings: $819+ annually

This is the single most effective way to save money:

• Get quotes from at least 3-5 insurers
• Don’t auto-renew without comparing
• New customers often get better rates
• Queenslanders, Northern Territory residents, and Northern Rivers NSW residents can save $1,000+ by switching

Pro tip: If you’ve been with the same insurer for 24+ months, call and ask for a loyalty discount before you switch. Many will match competitor quotes.

Strategy 2: Increase Your Excess

Potential savings: 10-14%

Important: Only increase your excess if you can comfortably afford to pay it when making a claim.

Strategy 3: Bundle Your Policies

Potential savings: 10%

Combine multiple policies with one insurer:

• Building + contents insurance
• Add car insurance
• Some insurers offer 10% discount for 3+ policies

Caution: Always compare bundled pricing against individual policies from different providers. The cheapest option isn’t always a bundle.

Strategy 4: Pay Annually Instead of Monthly

Potential savings: 10-25%

Monthly payments typically include interest or administration fees. Paying upfront can save significant money over the year.

Strategy 5: Accurately Value Your Property

Many homeowners are over-insured without realising it:

• Use your insurer’s sum insured calculator to get accurate rebuild costs
• Don’t insure for market value — insure for rebuild cost
• Review your contents value and remove items you no longer own
• Over-estimating means paying higher premiums for no additional benefit

Strategy 6: Improve Your Home Security

Potential savings: 5-15%

Insurers reward lower-risk properties:

Strategy 7: Invest in Disaster Resilience

Making your home more resistant to natural disasters can reduce premiums:

• Storm shutters for cyclone-prone areas
• Ember guards and fire-resistant materials for bushfire zones
• Flood barriers or raised floor levels
• Stronger roofing materials (cyclone-rated)
• Modern electrical and plumbing systems

Some insurers are beginning to recognise these improvements with premium reductions.

Strategy 8: Maintain Your Property

Well-maintained homes are seen as lower risk:

• Repair damaged roofs before they leak
• Clear gutters regularly
• Trim trees near the house
• Fix electrical issues promptly
• Address plumbing problems early

Insurers may refuse claims if damage results from poor maintenance.

Strategy 9: Look for Online Discounts

Potential savings: 5-10%

Many insurers offer discounts for:

• Purchasing online (no call centre costs)
• Setting up automatic payments
• Going paperless with statements

Strategy 10: Review Your Policy Inclusions

Are you paying for coverage you don’t need?

• Accidental damage: Useful with kids, but maybe not for everyone
• Motor burnout: Only relevant if you have older appliances
• Temporary accommodation limits: Reduce if you have family to stay with
• Jewellery and valuables: Consider separate valuable items insurance if you have high-value items

Strategy 11: Ask About Available Discounts

Insurers don’t always advertise all their discounts:

• Age discounts (some insurers offer discounts for over-50s)
• Claims-free discounts
• Loyalty discounts (ask after 2-3 years)
• Membership discounts (RAC, RACQ, NRMA members)
• Professional association discounts

Strategy 12: Consider an Insurance Broker

Brokers can:

• Access products not available directly
• Negotiate on your behalf
• Find coverage for hard-to-insure properties
• Provide claims assistance

Their service is typically free to you (they’re paid by insurers).

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Government Help: What’s Being Done?

Cyclone Reinsurance Pool

The Australian Government’s Cyclone Reinsurance Pool is making a difference:

• Homes in highest cyclone risk bands seeing 20%+ premium reductions
• Average 11% reduction for medium-high cyclone risk properties
• Strata insurance savings: Townsville (28%), Karratha (23%), Mackay (19%)

However: Properties with no cyclone risk are seeing 7% premium increases to fund the pool.

Hazards Insurance Partnership (HIP)

The government has committed $22.6 million to the Hazards Insurance Partnership, which:

• Brings together government, insurers, and emergency services
• Works on data sharing to better understand risks
• Develops principles for reflecting mitigation in premiums
• New guiding principles expected early 2026

Disaster Ready Fund

A $2 billion fund for disaster mitigation projects is projected to reduce costs by $19 billion over time through prevention rather than recovery.

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What to Do If You Can’t Afford Insurance

If premiums are unaffordable, don’t go uninsured. Consider these options:

1. Reduce Coverage Strategically

• Increase excess to the maximum you could afford
• Remove non-essential add-ons
• Consider building-only or contents-only if you must choose

2. Seek Alternative Quotes

• Try specialist insurers for high-risk areas
• Contact an insurance broker
• Check if you qualify for government schemes

3. Invest in Risk Reduction

Some councils offer grants for:

• Flood resilience improvements
• Bushfire preparation
• Cyclone-proofing

These improvements can make your property insurable at a reasonable rate.

4. Financial Hardship Options

If you’re struggling to pay:

• Ask your insurer about hardship provisions
• Request a payment plan
• Contact a financial counsellor (free service)

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What to Expect in 2026 and Beyond

Short-Term Outlook

• Premiums expected to rise another 10%+ in 2025-26
• Regional variations will continue to widen
• More granular risk pricing will create winners and losers

Longer-Term Trends

• Climate-related claims will continue rising
• Government intervention may expand
• Mitigation investments will become more important
• Some high-risk areas may become uninsurable without government support

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Your Action Checklist

Use this checklist to reduce your home insurance costs:

• Get quotes from at least 3-5 different insurers
• Call your current insurer to negotiate before switching
• Review your sum insured using an online calculator
• Consider increasing your excess (if you can afford it)
• Look at bundling home and car insurance
• Switch to annual payments if paying monthly
• Check for security upgrade discounts
• Remove coverage you don’t need
• Ask about all available discounts
• Document home improvements for potential premium reductions

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Key Takeaways

1. Premiums rose 14% last year — the biggest jump in a decade

2. 1.61 million households are now in insurance stress (paying 4+ weeks income)

3. Shopping around can save $819+ annually — this is the most effective strategy

4. Increasing your excess from $750 to $1,500 can save ~14%

5. Regional variations are extreme — north WA averages $4,600+/year vs SA at ~$2,000

6. The Cyclone Reinsurance Pool is helping high-risk areas, with 20%+ savings for some

7. Home improvements for disaster resilience are increasingly recognised by insurers

8. Don’t go uninsured — if you can’t afford full coverage, reduce strategically rather than cancelling

The insurance market is challenging, but with the right strategies, you can significantly reduce your costs while maintaining the protection your home needs.