Quote prices to insure a typical home and car in Australia’s capital cities have climbed an average of 6.36 per cent – about $256 – in the past six months, according to Compare the Market’s Household Budget Barometer Pulse Report.
The national capital average insurance quote for a typical four-bedroom house increased by $164, up 6.8 per cent from $2,410 to $2,574 since September 2024.
Sydney had the most expensive home and contents quotes, costing an average $3,219.
While home and contents cover remains comparatively cheap in Melbourne and Adelaide, these two cities saw the steepest price increase over the six months, with average quote prices rising 9.68 per cent and 8.73 per cent respectively.
There has been some discounting in Perth where average home and contents quotes were 0.1 per cent cheaper than during the December quarter, following a larger increase of 5.16 per cent between September and December.
What’s causing premiums to rise?
While the pace of price growth slowed during the March quarter, local weather events like ex-Tropical Cyclone Alfred, and international disasters like the Los Angeles fires could see costs passed on to consumers later this year.
The repair bills for these major weather events can blow out to billions of dollars, which has an impact on future reinsurance costs, and these are ultimately passed on to consumers through higher premiums.
Insurance costs have been one of the biggest contributors to inflation over the past few years as the rise of natural disasters has been compounded by rising construction and labour costs.
Meanwhile, the average comprehensive car cover quote was up 5.75 per cent… an average increase of $101.
Perth saw the biggest percentage increase in car quotes with a 3.79 per cent increase quarter on quarter, and up 7.28 per cent over the past six months. Sydney saw the greatest price change by dollar value, with $150 added to the average car insurance quote over six months.
Shop around and save
It is more important than ever for insurance customers not to be ‘one quote wonders’ and shop around for bigger discounts.
The Compare the Market insurance experts see price gaps of hundreds – sometimes thousands – between quotes from different insurers, so if you’re not impressed with the premium increases you’re seeing, don’t stop there – shop around instead.
In one case there was a $2,436 price variance between quotes to insure the very same Sydney home in Marsfield. In that case, shopping around for a better deal could mean the difference between taking a holiday or staying at home this year.
In Brisbane’s Ferny Grove, there was a $2,276 difference between insurance premiums for the same four-bedroom home.
In Melbourne’s Hampton East there was a $2,434 gap between premiums for the same popular car model.
In Sydney’s San Souci quote prices for the same four-bedroom home varied as much as $10,181.
It is weird and annoying that different companies can charge different premiums for the same item being insured. Insurance underwriters rate risk differently and they have their own preferences based on the history of claims made before by people that live in your area with similar characteristics.
For example, some insurers may weigh the risk of theft heavily if you park your car on the street while others might be more concerned about how often you use your car and the distance you travel. That’s why premiums can differ so dramatically, and it pays to shop around.
Vote with your feet and tell your insurer that you won’t cop unreasonable premium hikes. While Australia’s insurance market remains tightly held by a few big brands, comparing and switching is one way to help drive competition. Remember, insurers want your business … consistently moving to cheaper offers will incentivise them to keep rates competitive.
