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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

A home insurance policy gives you the peace of mind that your expenses would be reasonably 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.

The good news is that you typically may be able to 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, as it should just be part of your policy to cancel when needed. However, keep in mind that some insurers may charge a small home insurance cancellation fee. 

Cancelling a home insurance policy

To cancel your home insurance policy, all you have to do is get in touch with your current insurer and advise them of this decision. You can do this either by sending an email or calling your insurer. 

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 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 insurers may even 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 nominal 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 of about $30-$40. 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. 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. 

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. 

A lender may deny your home loan refinance if you do not have home insurance. In this instance, you may want to consider cancelling your policy after you are approved with the new lender. 

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Product database updated 28 Mar, 2024

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

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Product data updated on 28 Mar 2024