Why do home insurance premiums change?
Home insurance pricing can feel confusing at times, but it’s about helping cover the cost of future claims. Your premium can be affected by things like repair costs, weather risks and the cover you choose. Here’s a simple look at what can drive premium changes.
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Have you ever opened your insurance renewal to see a change in your premium?
There are usually a few reasons behind a price change. Some are specific to your home insurance policy, while others might be due to factors like rising rebuilding costs, severe weather events, or government charges.
Here’s a look at what can affect your home insurance premium, plus a few things to check when renewal time rolls around.
Related article: 5 tips to review your home insurance
What could affect your home insurance premium
Home insurance is designed to help you get back on track if something unexpected happens to your home. To make sure there’s enough to money cover future claims, insurers estimate costs based on data, trends and risks when setting premiums.
A few things can affect your premium, including:
- Where your home is located
- The type of property you have
- The cover you’ve chosen
- Your sum insured
- The excess you select
- Any extra options
- Your claims history
- Building costs
- The number and scale of severe weather event
- Government taxes and charges
- Inflation
Why home insurance premiums can increase
If you’re asking, “why has my home insurance gone up?”, here are a few common reasons.
Rebuilding and repair costs have increased
The cost of materials and trades can rise over time. When it becomes more expensive to repair or rebuild homes, that can result in higher home insurance premiums.
Severe weather events are causing more damage
The number and severity of floods, storms and bushfires, and other major weather events also increase claims costs, which may affect the cost of home insurance over time.
Risk factors affecting your home may be different
Things like crime rates in your area, security features, or your claims history can all play a part in how your premium is worked out.
Your cover or sum insured may have been updated
If your sum insured has gone up, or you’ve changed your cover or added extra options, your premium might change too.
Increases in claims costs across the insurance industry
Premiums can be influenced by the overall cost of claims, not just your own claims history.
Higher repair costs, supply chain delays, labour shortages, and large natural disaster claims can all contribute to higher insurance costs across the market.
Premiums are also impacted by government taxes and levies like the NSW Emergency Services Levy.
Related article: Sum insured for home insurance
Things to check when your renewal comes through
| Review your | What to think about | Why it matters |
|---|---|---|
| Sum insured | Consider whether the amount your are insured would be enough to rebuild your at home at today's costs. This is important, given building materials and labour costs have increased over recent years.1 These calculators can help: | Having an accurate sum insured is important to make sure you are fully covered. While reducing your sum insured may reduce your premium, it could leave you with a shortfall in the event of a major claim. |
| Basic excess | An excess is the amount you agree to contribute if you make a claim. | Think about an amount you could comfortably pay at claim time. |
| Additional cover options | Consider extra options such as accidental damage cover. | Look at optional benefits and make sure you're not paying for options you no longer need. |
| Property details | Make sure your insurer has current information about your home, renovations, security features and occupancy. | Accurate details help ensure your premium and cover reflect your circumstances. |
Bottom line
If your home insurance premium increases, it’s understandable to want to know why. And it’s important to consider how changes to your premium might impact your cover. Think about the protection you’d want in place if something unexpected were to happen.
Some QBE Home Insurance policies come with a Buildings Sum Insured Safeguard benefit. That means if you have an approved claim, we could pay up to 30% more than the buildings sum insured amount shown on your Certificate of Insurance.
At the heart of it, home insurance is about providing protection for your home when you need it most.
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1 https://www.abs.gov.au/articles/insights-output-building-construction-prices