Australian homeowners should expect many renewal notices to stay expensive, especially in areas exposed to flood, cyclone, bushfire or severe storm risk. The main drivers are higher rebuilding costs, larger weather claims, higher reinsurance costs and updated risk modelling. Do not respond by simply lowering your sum insured without checking what it would cost to rebuild.

Why premiums are rising

Home insurance is priced around the insurer’s estimate of risk and replacement cost. If a property is more likely to suffer weather damage, or if rebuilding it would now cost more, the premium can rise even if the owner has never claimed.

According to ASIC MoneySmart, home insurance helps with repairing or rebuilding a home and can cover events such as theft, fire, storms and floods, depending on the policy terms (MoneySmart, 2026). That “depending on the policy” part matters. Flood, storm surge, actions of the sea, temporary accommodation, debris removal and rebuilding code upgrades can be treated differently from one insurer to another.

Consumer reporting also shows the pressure is not theoretical. Guardian Australia reported that CHOICE found the average home insurance premium in its tested sample rose 16 percent, or A$359, over the 12 months to January 2025, as of February 2025; verify current terms in the PDS or with a licensed adviser before deciding (Guardian Australia, 2025).

What homeowners can do now

First, read the renewal notice line by line. Check the premium, excess, sum insured, listed events, optional flood cover, contents limit and any new exclusions. Then read the Product Disclosure Statement (PDS) and Target Market Determination (TMD), because the cheaper policy may also have narrower cover.

Second, compare quotes using the same assumptions. Match the building sum insured, contents amount, excess, flood option and listed valuables, otherwise the price comparison will be misleading. The Insurance Council of Australia says its consumer resources cover general insurance products, protections, premiums and processes, and also points consumers to risk reduction and building calculators (Insurance Council of Australia, 2026).

Third, review your excess carefully. A higher excess can reduce the premium, but it also means you pay more at claim time. It only makes sense if you could comfortably pay that amount after a fire, storm or water damage event.

Read also: Why Australia Faces a Climate-Driven Home Insurance Crisis

Fourth, reduce genuine risk where practical. This may include clearing gutters, maintaining roofs, improving drainage, installing suitable shutters in cyclone areas, checking flexi hoses, and documenting upgrades. Some insurers ask about mitigation work when pricing cover.

The underinsurance trap

The riskiest response to a higher premium is cutting the building sum insured to make the renewal affordable. If the insured amount is too low, a major claim may leave a gap between the payout and the actual rebuild cost. ASIC MoneySmart warns that underinsurance means you do not have enough insurance to cover the cost of rebuilding, repairing or replacing what you own (MoneySmart, 2026).

A better approach is to use a building calculator, get a builder or quantity surveyor estimate where appropriate, and compare multiple insurers before changing the insured amount. For strata or townhouse owners, also check what the body corporate policy covers and what remains your responsibility.

If you cannot afford the renewal

Contact the insurer before the due date and ask about hardship options, excess changes, payment frequency and policy adjustments. If a claim, complaint or hardship request is mishandled, keep records and use the insurer’s internal dispute resolution process first. If unresolved, you may be able to escalate to the Australian Financial Complaints Authority.

General advice warning: This is general information only and does not take into account your objectives, financial situation or needs. Before acting on it, consider whether it is appropriate for you, read the relevant PDS and TMD, and consider obtaining personal advice from a licensed adviser. Cover, exclusions, premiums and availability vary by insurer and by state or territory. For personal legal or tax issues, speak with a solicitor or registered tax agent.