Home Insurance

How Much Should I Pay for Home Insurance in Australia?

Updated May 2025  |  9 min read

The average Australian household now pays $2,795 a year for combined home and contents insurance. That is up 14% from $2,452 in 2024, and up more than 51% over the past five years.

But averages hide a lot. Where you live, what you own, and which insurer you are with can push that number well above or below the national figure. More importantly, the average is not what you should be paying. The question is whether your specific premium is fair given your actual risk.

Here is what the data shows, what drives costs, and how to tell if you are getting ripped off.

What Australians Actually Pay by State (2025)

State differences are significant. Queensland and the Northern Territory carry the highest premiums, driven by cyclone risk and flood exposure. Tasmania and South Australia tend to sit lower.

State / Capital City	Average Annual Premium	Year-on-Year Change
Darwin	$4,015	High cyclone exposure
Sydney (NSW)	$3,964	+18%
Brisbane (QLD)	$3,872	Flood zone impact
Melbourne (VIC)	~$3,033	Steady rise
Perth (WA)	~$2,590	Below national avg.
Adelaide / Canberra / Hobart	$2,042 - $2,622	Lowest capitals

Sources: Finder, Canstar, Insurance Business Australia (2025 data).

What Drives Your Premium

Understanding what insurers are pricing helps you work out whether your premium is reasonable or inflated.

Location risk is the biggest factor. A house in a designated flood zone or cyclone corridor will always cost more to insure than a comparable property in a low-risk suburb. Insurers use detailed postcode-level risk models. Two houses on the same street can carry different risk scores.

Your sum insured matters more than your property value. Rebuilding a home costs significantly more than its market price. The Insurance Council of Australia estimates that a substantial portion of Australians are underinsured, meaning their sum insured would not cover a full rebuild. Insurers do not volunteer this information at renewal time.

Construction type and age affect the base rate. Brick veneer gets treated differently from weatherboard. Older wiring, older plumbing, and older roofing all push premiums up because the claim risk is higher.

Your claims history follows you. More than two claims in three years will typically push your premium up, regardless of the circumstances.

How long you have been a customer is a factor most people do not know about. Insurers routinely offer lower rates to attract new customers while gradually lifting premiums for existing ones. Research by Mozo found existing customers pay an average of 34% more than new customers for equivalent policies by year two or three. This is the loyalty tax.

5 Signs You Are Overpaying

1. Your premium went up at renewal and nothing changed. No new claims, no renovations, no change to your circumstances. A significant increase at renewal, beyond general CPI inflation, is a red flag. If your insurer raised your premium by 10% or more with no explanation, you are likely being price-walked.
2. You have been with the same insurer for more than two years without checking. The loyalty tax kicks in fast. If you have auto-renewed twice without getting a competing quote, the gap between your premium and a new-customer rate may already be substantial.
3. Your sum insured is set to market value, not rebuild cost. Some policies default to market value, which is almost always lower than what it would actually cost to rebuild. That means you are underinsured, yet still paying a premium based on an inflated figure.
4. You are paying for features you cannot use. Accidental damage cover, motor burnout, jewellery cover above a low sub-limit. These add-ons inflate premiums. If you have cover you have never needed and cannot picture ever claiming on, you are paying for marketing padding.
5. Your excess is low and your premium is high. A $250 excess sounds like protection, but it typically pushes premiums up considerably. Raising your excess to $1,000 or $2,500 on a home policy can reduce your annual premium by 20-30% while barely changing your real-world exposure on anything worth claiming.

What to Do About It

The standard advice is to shop around. That is correct, but incomplete. The problem most people face is that reading three different product disclosure statements, comparing excess structures, and understanding what is actually excluded takes hours. Most Australians do not do it. Insurers know this.

Before you start calling comparison sites, pull out your current policy and answer three questions. What is your sum insured, and is it based on rebuild cost? What is your excess? What exclusions apply to the events most likely to affect your property?

If you cannot answer all three from memory, you do not actually know what you are paying for. That is exactly what insurers count on.

Once you have those numbers, you can compare meaningfully. Do not compare premium to premium across different excess levels. Do not assume a lower premium is better without checking what it excludes. And do not assume that because a comparison site returned a result, you are getting the best available rate. Many comparison sites are paid referral partners of the insurers they list.