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How to find cheap home insurance

Looking for a more affordable home insurance policy? Compare options from a range of insurers and see what discounts may be available to you.

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How much does insurance cost?

The main cost to pay when buying a home insurance policy is the insurance premium. This is the money you pay each year to the insurer, in return for which the insurer covers your home if it is damaged or destroyed.

Because every Australian household is slightly different, so too will be the cost of their home insurance premiums. Insurers use a wide range of different factors to determine your policy’s cost, with each insurer calculating the premiums slightly differently. 

Some of the factors that can affect how much a home insurance policy costs include:

Your level of coverage

Generally, the more thoroughly your home and its contents are covered by an insurance policy, the more its premiums may cost.

Your home’s value

Higher-priced homes usually mean more expensive home insurance premiums, and vice versa.

Your home’s location

If your home is located in an area with higher-than-average crime rates or risk of natural disasters, you may need to pay more for your insurance premiums.

Your home’s age

Older homes are more likely to cost more to insure, as they may cost more to repair or rebuild if damaged.

How the home is used

Are you living in the property as an owner occupier, or rentinting out to tenants as a property investor? Each scenario involves a different type of risk, and may affect how much you’ll pay for home insurance.

Is it cheaper to have combined or separate home and contents insurance?

Home insurance only covers damage to your building and permanent outbuildings (e.g. the garage, garden shed etc.), and not to the possessions you keep inside. Similarly, contents insurance only covers the items you keep in your home from loss or damage, and doesn’t apply to the walls, roof, and other physical structures of your building.

As the old saying goes, you get what you pay for. Generally, a building-only or contents- only insurance policy will cost less than a combined home and contents insurance policy, though you may be left underinsured in the other area. But if you want to insure both your home and its contents, a single combined home and contents insurance policy will generally be cheaper than taking out two separate policies.

Keep in mind that some types of insurance are better suited to different customers. For example, landlords may benefit from home-only insurance policies to help cover damage to their investment property, and special landlord insurance is also available to offer extra cover against damage caused by tenants and similar risks unique to landlords. Similarly, renters may benefit from a contents-only insurance policy, as their landlord is expected to look after insurance for the building itself. Specific renters’ insurance policies are also available that offer renter-specific coverage.

Can you get cheap insurance everywhere in Australia?

The cost of home insurance policies can vary greatly depending on a wide range of factors, including where the property is located. This can mean that your postcode determines your premiums

Some areas of Australia are at higher risk of experiencing certain insured events, such as floods, cyclones or other destructive storms, or bushfires. Properties in these areas are more likely to be charged higher insurance premiums than properties in other areas, due to the higher risk of damage. 

Similarly, areas with higher-than-average crime rate may also be charged more for insurance policies, though you may be able offset some of the insurer’s risk and bring down the premium costs by adding or improving security to your home such as cameras, locks, bars, roller doors and more.

How to make home insurance cheaper

The more you can reduce an insurer’s level of risk when it comes to your insurance, the less the premiums may cost in general. However, this can mean putting yourself at risk of finding yourself underinsured and/or having to pay for damage to your property out of your own pocket following an insured event.

Total replacement or sum insured?

Total replacement home insurance cover is often more expensive than sum insured cover, as the insurer pays to repair or rebuild your home if it is damaged, no matter the total cost, while sum-insured cover puts a maximum cap on how much the insurer may pay. 

You may be able to further lower your premiums by reducing your maximum sum insured amount, though this could leave you at risk of being underinsured when the worst happens.

Adjust your excess

Your insurance excess is the amount you’ll pay out of your pocket when you make a claim. You can often adjust the excess in your insurance policy, which may affect the premiums you’ll pay. 

Choosing to pay a higher excess when you make a claim in the future can mean you’ll get to save money on your insurance premium today, though this could hit your household budget harder at a time when you’re already under pressure. 

The reverse is also true – if you can afford to pay a higher premium, you can opt for a lower insurance excess, so more of your claim is looked after by the insurer.

Carefully consider the optional extras

Many home insurance policies are filled with additional coverage options, which may sound very appealing to some customers. For example, this could include covering motor burnout, accidental damage, or covering your home’s portable contents

But think long and hard before adding any of these extra offers to your policy, as you could end up having to pay more for your insurance now and in the future. Consider the value they may add to your policy and if this would be with the extra cost. 

Avoid making claims if possible

When you stick with the same insurer for several years without making a claim on your policy, the insurer may offer a discount on your insurance premiums. This no-claim bonus or discount may be reduced or removed if you make a claim in the future. You may even be able to access a no claim discount when you switch insurers by providing details of your claim history.   

Stay loyal and take out multiple policies

Some insurers offer a loyalty bonus that can discount your premiums if you stay with the same insurer for several years. You may also receive discounts if you take out additional insurance policies with the insurer, or other financial services if the insurer is part of a bank or other financial institution.

Switch to a new insurer for a bonus discount

Some insurers may offer an introductory discount to new customers to encourage them to switch policies. Keep in mind that this offer may only last for the first year of holding the policy, so the costs could rise after that.

Choose home only or contents only insurance

If you don’t need a combined home and contents insurance policy, opting to only insure your home or its contents could cost you a little less. 

For example, home insurance is often required to apply for a mortgage to buy a home, but contents insurance may not be essential. On the other hand, buying a strata unit means you should already be covered by the building’s strata insurance, so you may only want a contents insurance policy. 

Go online

Some insurers offer discounts to customers who apply for insurance policies online, as it saves them some admin costs when processing your application.

Pay the premium annually

You may be offered the option to pay your insurance premium as one lump sum, or as monthly instalments over the course of the year. While each instalment may be a smaller hit on your household budget, it may be cheaper in total to pay the premium as a lump sum.

Improve your home security

Adding locks and bars to your doors and windows, or installing security cameras, motion sensors or alarm systems in your home, can help reduce your risk of experiencing a break-in, home invasion, or other crime. Because this can help reduce the chances of making a claim, the insurer may discount your policy further.

Use your seniors card

Older Australians may be able to use their Seniors Card to access a discount on their home insurance policy with selected insurers.

How to find cheap home insurance

You can use RateCity’s tables to compare home insurance policies from different insurers side by side, including what discounts may be available to you. By adjusting the filters, you can narrow down the section to the policies that may best suit your household. 

Keep in mind that just because an insurer offers cheap premiums, that doesn’t mean it’s the best choice of home insurance for you and your household. Before you apply, consider what you need from a home insurance policy and compare cheap home insurance quotes from multiple insurers. Look at not just the costs, but the inclusions, exclusions, features, benefits, fees and charges to get a better idea of the overall value they offer.

It’s often also worthwhile to check reviews of insurers and consult friends and family for word of mouth. You may hear that some insurers offer excellent customer service during a crisis, while others may take a long time to process and pay out claims.

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

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.