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Home insurance cancellation and refunds: what you need to know

Alex Ritchie avatar
Alex Ritchie
- 4 min read
Home insurance cancellation and refunds: what you need to know

Key highlights

  • You can often cancel your home insurance policy at any time without explanation, but be aware of potential cancellation fees.
  • Refunds for cancelled policies depend on payment frequency and cooling-off period, with pro-rata refunds possible for annual payments.
  • Consider the timing of cancellation, as lenders may require home insurance for loan approval, impacting refinancing applications.
  • You can typically cancel your home insurance policy at any time without having to wait for your renewal notice. You will not need to explain why or provide evidence; it should just be part of your policy to cancel when needed. However, some insurers may charge a small home insurance cancellation fee. 

    Cancelling a home insurance policy

    A home insurance policy gives you the peace of mind that your expenses would be covered if your home suffered unforeseen damages or theft. However, there are certain situations when you may want to cancel your existing home insurance policy. For example, some Australians are reportedly cancelling insurance policies in response to rising premiums

    To cancel your home insurance policy, you can simply get in touch with your current insurer and advise them of this decision. You can do this by sending an email or live chat, calling your insurer, or by logging into your account on the insurer’s website.

    Some insurers may charge you a cancellation fee - typically around $30-$40, depending on the insurer. 

    It’s also worth noting that the insurer can also cancel your policy if it discovers you do not meet the conditions set when you signed up, including truthful information around your home, occupants or claim history. 

    Some may refund the premium you have paid, depending on whether or not you are in your cooling off period. Also, if an insurer cancels your policy, it may refund you a full or pro-rata amount of your unused premium - depending on its terms and conditions. 

    Refunds for home insurance policies

    Getting a refund when you cancel your policy will depend on whether you pay your premiums monthly or yearly, and whether you’re still in your cooling off period. There may be three possible scenarios:

    If you pay your premiums monthly:

    1. Your home insurance policy will be cancelled at the end of the month you've paid for.

    2. You may have to pay a cancellation fee.

    3. You’re unlikely to receive any refund as your policy gets cancelled at the end of the period you’ve paid for.

    If you pay your premiums annually:

    1. You can cancel your home insurance policy at any time during the year, but it won’t apply until the end of the month.

    2. You may have to pay an early cancellation fee. Your insurer may also deduct any discounts you might have received for paying your premium annually.

    3. Provided you haven’t made any claims during the year, you may receive a home insurance cancellation refund on a pro-rata basis for any unused months. This means you’ll receive a partial refund of your premium that’s equal to the number of months before your policy would renew for the year.

    If you are still in the cooling-off period:

    1. If you cancel your home insurance policy while it’s still in the cooling-off period without having made a claim, you’ll receive a full refund of the home insurance premium that you’ve already paid. Some insurers may deduct a proportionate amount from your refund to cover the number of days your policy was in place.

    2. You won’t be charged any cancellation fee for cancelling the policy during the cooling-off period.

    Can you be prevented from cancelling a home insurance policy?

    Your home insurance provider should allow you to cancel your policy. You only need to inform your insurer and pay any home insurance cancellation fees. 

    However, it’s worth keeping in mind that homeowners may want to carefully consider the timing of cancelling a policy. While having home insurance is not considered ‘compulsory’ in Australia, many lenders require that you have a sum-insured or total replacement home insurance policy in place to gain approval for a home loan. So if you’re looking to refinance your home loan, the lender may not approve your application if you do not have home insurance in place. 

    Compare home insurance

    Product database updated 16 Jun, 2024

    This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.