A recent survey conducted by iSelect has revealed that a significant proportion of Australians lack a comprehensive understanding of their home and contents insurance policies.
The research – which included responses from over 3,000 participants across Australia, Canada, and the US – found that only 37% of Australians felt confident in their grasp of what their insurance covers. This figure was lower than the corresponding results for Canada (43.3%) and the US (44.7%).
The survey results indicate that 46.1% of Australian respondents have only a general sense of their policy’s coverage, while 5.1% admitted to being unsure about what their insurance entails.
Notably, 11.8% of those surveyed in Australia said they do not have any home or contents insurance, which is a higher rate than seen in the other countries included in the study.
When it comes to understanding their excess, 40.8% of Australians reported knowing the exact amount, while 45.1% had only a general idea.
Another 14.1% said they were unaware of their excess amount, suggesting that a considerable portion of policyholders may be unprepared for potential out-of-pocket expenses in the event of a claim.
The study also examined how often Australians review or update their insurance policies. Sixty percent of respondents said they had reviewed or updated their policy within the past year. However, 9.3% acknowledged that they had never revisited their policy since its inception.
Updating contents valuations appears to be infrequent among policyholders. Only 26.4% said they update their contents valuation after making significant household purchases. The majority either make changes only at the time of policy renewal (29.5%) or not at all (44.1%).
Adrian Bennett, general manager of general insurance at iSelect, addressed the survey results by emphasising that home and contents insurance provides reassurance for homeowners and their possessions.
“It’s important to ensure that your contents valuation is up to date so that, should something unexpected happen, you’re properly covered,” he said.
In addition to knowledge gaps, Australians are also facing higher home and contents insurance costs.
Research from Finder, conducted in late 2024, found that 69% of insured homeowners had experienced a premium increase in the previous year. This trend has affected an estimated 6.4 million households nationwide.
The research also showed that 9% of respondents were unsure whether their premiums had changed, highlighting a potential lack of engagement with policy costs.
Separate analysis by the Actuaries Institute, in collaboration with Finity actuaries, found that affordability stress is on the rise.
By March 2024, 1.6 million households were classified as experiencing affordability stress – defined as spending more than one month’s gross annual income on insurance. This marks a 30% increase from the previous year, with the proportion of affected policyholders rising from 12% to 15%.
On average, Australian households now spend the equivalent of 9.6 weeks of gross income on home insurance.
