Your home insurance renewal notice landed with a thud, and the figure on the page felt like a punch in the gut.
The surge in premiums left many retirees wondering how they could possibly keep up.
For Australians already stretched thin, the numbers only seemed to climb higher.
The rising cost of home insurance in 2025 was unlike anything households had seen before.
Average premiums jumped 16 per cent—an extra $359 a year—but some increases were far more brutal.
One Tasmanian homeowner saw their premium with Honey Insurance leap by 89 per cent despite having no history of disasters or claims.
Experts warned that the pain would not stop there, with both home and motor insurance tipped to rise by another 10 per cent on average this year as companies lifted profits beyond long-term averages.
'Unfortunately, time and time again, across all sorts of financial products, we see that loyal customers get the raw end of the deal and new customers get the shiny big discounts.'
Australians found themselves in the middle of a perfect storm.
Record-breaking floods in 2022 pushed insurance claims past $7 billion, driving up costs across the country—even in regions untouched by disasters.
The industry also moved into a ‘hard market’ cycle, where demand outpaced supply and premiums soared.
But perhaps the hardest blow was the so-called loyalty penalty.
Research revealed that existing customers often paid between 27 and 34 per cent more than new ones, amounting to $3.6 billion annually in what consumer advocates called ‘loyalty taxes’.
How switching can save you money
The good news was that switching providers could save households hundreds—sometimes thousands—each year.
Research showed that moving to a five-star policy delivered major savings, including $1,172 in the Northern Territory, $921 in Queensland, and $732 in New South Wales.
Even in Victoria and South Australia, where the savings were smaller, switching still cut more than $600 from annual costs.
Your switching action plan
- Compare your renewal premium to last year's cost
- Check what your current insurer offers new customers online
- Get quotes from at least 3-4 different providers
- Consider the trade-off between lower premiums and higher excess amounts
- Don't assume bundling multiple policies saves money
- Set a calendar reminder to repeat this process annually
CHOICE compared quotes from 35 insurers and found 19 of them raised premiums at nearly every address tested between January 2024 and January 2025.
Among the worst were Kogan, which lifted prices by nearly 38 per cent, RAC with 32.6 per cent, and Honey with 30.7 per cent.
By contrast, a handful of insurers showed restraint.
RACQ had no average increase, NRMA limited rises to 1.7 per cent, and CBA sat at 5.2 per cent.
Warning signs your insurer might be taking advantage
Your premium increases significantly more than inflation (currently around 3-4%)
You haven't received a clear explanation for the increase
You've been with the same insurer for several years without switching
Your renewal notice doesn't show last year's premium for comparison
The increase seems disproportionate to any claims or risk changes in your area
Why older Australians feel the pressure
For older Australians, the process of comparing quotes often felt daunting.
Websites and digital tools could overwhelm, but there were ways around the barrier.
Calling insurers directly, asking family for help online, or using step-by-step comparison sites all made the task easier.
Premiums also varied dramatically depending on location.
In Sydney, homeowners in high-risk suburbs paid more than triple the premiums of those in safer areas.
Across greater Sydney, the average premium had climbed by 66 per cent since 2020.
Did you know?
Uninsurable homes on the horizon A 2022 Climate Council report estimated that 4% of homes could be uninsurable by 2030, with high-risk areas seeing even steeper projections. This could particularly impact popular retirement destinations in coastal and bushfire-prone areas.
Looking ahead
Experts advised that while premiums would not drop soon, households still had options.
Adjusting coverage, raising excess amounts, or installing security systems could reduce annual costs.
Long-term, choosing where to live with insurance costs in mind was becoming an increasingly important financial decision.
Regulators also had their eyes on the sector.
ASIC Commissioner Alan Kirkland stressed that insurers had to treat customers fairly, warning that they could not blame cost inflation for rises without reducing premiums when inflation cooled.
Despite the stakes, 88 per cent of Australians still renewed with the same insurer, often missing out on savings that could ease financial pressure.
What This Means For You
In 2025, home insurance premiums climbed by an average of 16 per cent, and for many households the increases were even higher.
On top of that, loyalty penalties continued to sting, with existing customers paying billions more each year than new ones.
Yet, the chance to save remained—switching insurers had the potential to cut costs by as much as $1,172 annually, depending on where you lived.
Regulators also promised to keep a closer eye on the industry to ensure insurers treated customers fairly as premiums kept rising.
For older Australians, especially those on fixed incomes, these figures highlighted the importance of reviewing policies and refusing to let loyalty drain retirement savings.
Homeowners could save about $766 as insurance policies rise across Australia — Report on soaring premiums, loyalty penalties, and savings possible by switching insurers.
https://www.9news.com.au/national/h...ustralia/5be5e95f-4994-4045-96dd-4afb04a1b99d
Home Insurance Affordability & Home Loans at Risk—Actuaries Institute — Analysis showing 1.61 million households face affordability stress, spending over four weeks of gross income on premiums.
https://www.actuaries.asn.au/resear...nsurance-affordability-and-home-loans-at-risk
Home insurance prices surge | Insurance Business Australia — Average premiums rose 16 per cent in 2025, adding $359 annually to household costs.
https://www.insurancebusinessmag.com/au/news/breaking-news/home-insurance-prices-surge-526956.aspx
2025/26 Home Insurance Annual Premium Increases—Money—Community — A Tasmanian homeowner reported an 89 per cent hike with Honey Insurance despite no claims.
https://choice.community/t/2025-26-home-insurance-annual-premium-increases/33387
Australian home and car insurance premiums set to rise by at least 10 per cent in 2025 on average | The Nightly — Experts warned home and motor insurance would climb another 10 per cent on average this year.
https://thenightly.com.au/business/...ast-10-per-cent-in-2025-on-average-c-16881854
Australia and NZ face home insurance crisis due to climate, experts warn—Green Central Banking — Flood claims topped $7 billion in 2022, with climate risks pushing affordability into crisis levels.
https://greencentralbanking.com/202...insurance-crisis-due-to-climate-experts-warn/
Factsheet – Insurance premium increases | Australian Financial Complaints Authority (AFCA) — Natural disasters such as bushfires, floods, and cyclones raised costs nationwide, even in unaffected areas.
https://www.afca.org.au/about-afca/publications/factsheet-insurance-premium-increases
This is why your insurance premiums keep going up — Explains the hard market cycle, reinsurance costs, and price inflation driving premiums higher.
https://www.unsw.edu.au/newsroom/news/2024/09/this-is-why-your-insurance-premiums-keep-going-up
9 in 10 Australians facing higher home insurance costs | CHOICE — Reveals loyalty penalties where existing customers pay 27–34 per cent more, costing billions annually.
https://www.choice.com.au/money/ins...nts/articles/home-insurance-premium-increases
Kogan, RAC and Honey: the home insurers with the biggest annual price hikes | CHOICE — CHOICE compared 35 insurers and found 19 raised prices at nearly every address tested.
https://www.choice.com.au/money/ins...-insurers-with-the-biggest-annual-price-hikes
While soaring home insurance premiums are hitting households hard, the pain isn’t limited to properties alone.
Drivers across the country are also facing steep hikes, with motor insurance costs climbing at a rate that’s leaving many questioning how to keep their vehicles on the road.
If you’re already struggling with rising household bills, this story offers another look at how essential cover is becoming harder to afford—and what that means for everyday budgets.
Read more: Car insurance prices surge as drivers across states hit with shocking hikes
Have you recently switched insurers or been stung by a shocking premium hike…would you share your story to help others make smarter choices?
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