Claims outpaced premiums in the December quarter
The December 2025 quarter was the heaviest period for home insurance claims. Insurers paid $5.44 billion in claims against $4.33 billion in earned premiums, meaning claims cost more than the premium collected during the quarter.
Reinsurance absorbed much of the impact. This is the cover insurers buy to protect themselves against large claim events. Australian insurers recovered $1.62 billion through reinsurance in the quarter, the highest quarterly recovery on record.
Even after those recoveries, net claims still reached $3.60 billion. The pressure was not evenly spread across the country, with Northern Territory households paying the highest average combined home and contents premium at $4,814, compared with $1,933 in South Australia.
Where the claims landed
Queensland and the Northern Territory drove most of the damage in Q4 2025:
- Queensland: $3.47 billion in claims against $978 million in revenue (354%)
- Northern Territory: $101 million in claims against $29 million in revenue (348%)
- Western Australia: claims at 28% of revenue
- ACT: claims at 19% of revenue
Industry totals, 2024 vs 2025
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Gross written premium | $15.85bn | $17.05bn | +7.6% |
| Gross earned premium | $15.16bn | $16.64bn | +9.7% |
| Net earned premium | $10.72bn | $11.87bn | +10.7% |
| Gross claims | $8.62bn | $13.87bn | +60.9% |
| Reinsurance recoveries | $1.71bn | $4.30bn | +151.9% |
| Net claims | $6.56bn | $8.93bn | +36.1% |
Source: APRA Quarterly general insurance performance statistics.
Two quarters accounted for most of the rise in home insurance claims. In the March 2025 quarter, ex-Tropical Cyclone Alfred crossed the south-east Queensland coast and caused flooding across Queensland and northern NSW. Claims for the quarter reached $4.70 billion.
The December 2025 quarter was even higher in dollar terms, with claims reaching $5.44 billion. Queensland accounted for $3.47 billion of that total, suggesting severe weather in Australia’s tropical north was a major driver of the late-year increase.
Higher claims in 2025 may place upward pressure on premiums, but insurers do not price policies based on one year alone. They also consider reinsurance costs, capital requirements, long-term weather data and competition from other insurers. In 2025, net claims reached $8.93 billion, which was still below net earned premium of $11.87 billion. This means the industry absorbed the higher claims without recording an underwriting loss.
Whether customers see further premium increases in 2026 will depend partly on how global reinsurance markets price their 2026 contracts.
Home insurance has risen faster than contents cover
Insurance Statistics Australia tracks home insurance prices every quarter. Using March 2004 as the baseline, with the index set at 100, this is how prices had changed by March 2024:
- Home building cover: 100 to 524.6, more than 5 times higher
- Home contents cover: 100 to 172.9, about 1.7 times higher
For reference, general consumer prices (CPI) rose about 1.7 times over the same period. This means contents premiums broadly tracked inflation, while building insurance premiums rose much faster.
Why building cover increased faster
The cost of repairing and rebuilding homes has increased much faster than the cost of replacing household contents. Between 2004 and 2024, the average building claim cost rose from 95.6 to 1,079.8 on the index, making it more than 11 times higher.
This helps explain why building insurance premiums have moved well ahead of contents premiums. Building claims are tied to labour, materials, compliance, demolition, access and rebuilding costs, which can rise sharply even when general consumer prices move more slowly.
On the Insurance Statistics Australia index, where March 2004 = 100, building cover reached 524.6 by March 2024. That means building premiums were about 5.2 times higher than they were in 2004.
Contents cover rose more slowly, reaching 172.9 by March 2024, or about 1.7 times higher. CPI rose by roughly the same amount over the period, which means contents premiums broadly tracked inflation, while building premiums rose much faster.
Building premiums rise faster because the cost of repairing and rebuilding homes has increased much more sharply than the cost of replacing contents. Between March 2004 and March 2024, average building claim costs rose more than 11 times on the index, compared with 3.2 times for contents.
Rebuilding work also depends on specialist trades, materials, demolition, access and compliance costs. In higher-risk areas, stricter building standards for bushfire and cyclone exposure can add further cost. Contents are usually simpler and cheaper to replace.
How much is home insurance in 2025?
Home insurance costs rose across Australia in 2025, but the size of the increase depended on where households lived.
Canstar’s 2025 awards drew on more than 25,000 quotes taken in September 2025. The national average for combined home and contents cover was $2,795, up $343 from 2024, or a 14% rise.
Where premiums rose the most
Five jurisdictions recorded premium increases of 17% or more in 2025:
- New South Wales: up 18%, the largest percentage rise
- Northern Territory: up 17% with the biggest dollar increase at $700
- Victoria, South Australia, Tasmania: up 17%
Queensland, excluding North Queensland, rose 16%, while Western Australia had a smaller increase of 9%. North Queensland rose by only 2%, largely because it was already one of the most expensive markets in 2024, with average premiums of $4,512.
Home and contents premiums by state, 2025
| State or territory | Home (2025) | Contents (2025) | Combined (2025) | Combined (2024) | Change |
|---|---|---|---|---|---|
| New South Wales | $2,320 | $503 | $2,613 | $2,210 | +$403 (+18%) |
| Victoria | $2,024 | $467 | $2,299 | $1,958 | +$341 (+17%) |
| Queensland | $2,881 | $525 | $3,166 | $2,735 | +$431 (+16%) |
| North Queensland | $4,117 | $766 | $4,624 | $4,512 | +$112 (+2%) |
| South Australia | $1,675 | $414 | $1,933 | $1,646 | +$287 (+17%) |
| Western Australia | $1,943 | $471 | $2,224 | $2,032 | +$192 (+9%) |
| Tasmania | $1,882 | $436 | $2,155 | $1,838 | +$317 (+17%) |
| Northern Territory | $4,393 | $762 | $4,814 | $4,114 | +$700 (+17%) |
| Australia (national) | $2,485 | $520 | $2,795 | $2,452 | +$343 (+14%) |
Quotes use a range of addresses, dwelling types, building sums insured from $300,000 to $1.5 million, and contents of $50,000. Source: Canstar Home and Contents Insurance Awards, 2024 and 2025.
The average cost of combined home and contents insurance in Australia was $2,795 in September 2025, up 14% from 2024. South Australia had the lowest average at $1,933, while the Northern Territory had the highest at $4,814.
In dollar terms, the Northern Territory had the biggest increase, with premiums rising by $700. In percentage terms, New South Wales rose the most at 18%. Six jurisdictions recorded increases of 16% or more, while only Western Australia and North Queensland stayed in single digits.
Why does home insurance cost more in some areas?
Home insurance prices vary by location because insurers assess risk at a local level. The Australian Competition and Consumer Commission (ACCC) maps home insurance premium bands across about 330 SA3 areas in Australia, using four price groups: under $1,800, $1,800 to $2,400, $2,400 to $3,000, and $3,000 or above.
Where premiums are highest
The highest premium band is $3,000 or above. Every Northern Territory SA3 mapped by the ACCC falls into this band. Most of North Queensland also sits in the top band, including Cairns, Innisfail, Port Douglas, Townsville, Mackay, and the Whitsundays.
High-risk areas in other states also fall into this band. In New South Wales, this includes the Blue Mountains, Hawkesbury and Richmond-Windsor. In Western Australia, it includes much of the Kimberley and Pilbara.
Where premiums are lowest
The lowest premium band is under $1,800. These areas are mainly clustered in outer metropolitan suburbs and some regional areas, including:
- Outer Adelaide: Playford, Salisbury, Tea Tree Gully
- Outer Melbourne: Dandenong, Casey-South, Wyndham, Brimbank, Melton
- Outer Perth: Wanneroo, Kwinana, Canning, Gosnells
- Rural areas: parts of SA, WA, Victoria and Tasmania
Home insurance is more expensive in northern Australia because insurers price cover around the likelihood and cost of future claims. The tropical north is exposed to cyclones, monsoons and severe storms, which can lead to costly property damage. Major events such as Cyclone Yasi in 2011, Cyclone Debbie in 2017 and ex-Tropical Cyclone Alfred in 2025 show how large these claim events can become.
This is reflected in premium data. Almost every Northern Territory SA3 mapped by the ACCC sits in the $3,000-plus premium band, while North Queensland averaged $4,624 for combined home and contents insurance in 2025.
The cheapest home insurance areas are mostly in outer metropolitan suburbs and some regional areas. SA3 areas in the under $1,800 band include outer Adelaide suburbs such as Playford, Salisbury and Tea Tree Gully; outer Melbourne areas such as Dandenong, Casey-South, Wyndham, Melton and Brimbank; and outer Perth areas such as Wanneroo, Kwinana and Canning.
Several rural parts of South Australia, Western Australia and Tasmania also fall into the lowest band. At state level, South Australia had the lowest average combined home and contents premium in 2025 at $1,933.
Home insurance costs by state and territory
Home insurance costs can look different depending on the dataset used. Quoted premiums show what households may pay, claims data shows the pressure on insurers, and regional price bands show how costs vary within each state.
The state comparison below brings together three datasets for each state or territory:
- Canstar (September 2025): average quoted premium, from a consumer view
- APRA (Q4 2025): industry claims vs revenue
- ACCC (2024): typical premium band at SA3 level
They use different methods and reference dates, so they are best read together.
Note: Canstar does not publish a separate ACT figure. APRA and ACCC data shown as published.
The ACCC’s SA3 analysis is the most detailed public data available for local home insurance costs. It maps about 330 regions across Australia into four premium bands and is published with the ACCC’s insurance monitoring reports. For an actual quote, insurers use the exact property address. Factors such as building age, construction type, location risk and sum insured can all affect the final premium.
State averages are useful for comparison, but they should be treated as a benchmark rather than a quote.
South Australia had the lowest average combined home and contents premium in 2025 at $1,933. Tasmania followed at $2,155, while Western Australia averaged $2,224.
Western Australia also had the smallest annual rise among the mainland states, with premiums up 9%. Lower premiums usually reflect lower exposure to tropical cyclones and major flood risk.
How many Australians are underinsured?
In 2025, The Australia Institute surveyed 2,009 Australians about their home insurance. Among people who owned their home outright or had a mortgage, the survey found clear gaps in both building and contents cover.
Among homeowners surveyed:
- Home building: 78% fully insured, 15% underinsured, 4% uninsured
- Home contents: 68% fully insured, 19% underinsured, 10% uninsured
That means 19% of homeowners had insufficient building cover, while 29% had a gap in contents cover.
Why the gap matters
Underinsurance often builds up over time without the homeowner noticing. A sum insured that was accurate five years ago may no longer cover the full cost of rebuilding today.
This matters because a claim payout is usually limited by the insured amount, not the actual cost of repairing or replacing the home. If the cover has not kept pace with current costs, the homeowner may have to pay the shortfall themselves.
Source: The Australia Institute, 2025 survey of 2,009 Australians who own outright or have a mortgage. Don’t-know responses not shown.
The Australia Institute’s 2025 survey found that 15% of homeowners described their home building cover as underinsured, while 4% were uninsured. Together, that puts 19% of homeowners in the gap for building cover. Contents cover was less complete. 19% of homeowners said they were underinsured for contents, while 10% were uninsured. That means 29% were in the gap for contents cover.
The true level of underinsurance may be higher because the survey relies on self-reporting. Many homeowners may not know whether their sum insured still matches the current cost to rebuild.
Uninsured means there is no policy in place. If the home is damaged, the owner has to pay the full cost themselves.
Underinsured means there is a policy, but the sum insured is too low to cover the full cost of rebuilding or replacement. Some policies may also reduce partial claim payouts if the sum insured is too low.
Both leave the owner exposed, but underinsurance is usually less obvious because it can build up quietly over time.
References
- APRA: Quarterly general insurance performance statistics, December 2025 release.
- Canstar: Home and Contents Insurance Awards and Star Ratings, 2024 and 2025.
- ACCC: Insurance monitoring reports, SA3-level premium analysis, 2024.
- The Australia Institute: 2025 home insurance coverage survey of 2,009 Australians.
- Insurance Council of Australia: Insurance Statistics Australia quarterly home insurance index.
- Australian Bureau of Statistics: Statistical Area Level 3 definitions.
- Bureau of Meteorology: Historical cyclone and severe weather records.
Data Snapshots
