Bushfire and flood prone areas are often also home to lower-wage workers, leaving them exposed to difficulties paying rising insurance bills.
One in five Australians are considering ditching their home insurance in response to surging costs, risking a rise in costs for the rest of the nation — and more natural disaster deaths.
The poll completed by YouGov for the Climate Council also found 54 per cent of the nation now fears worsening weather events and natural disasters would make home and contents insurance unaffordable, or unavailable in their area.
About 46 per cent believe extreme weather has already caused an increase in their insurance costs.
RELATED: Millions of Aussie homes at risk of LA-style firestorm, experts warn
‘Say goodbye’: Firefighter’s warning for Aussie suburbs at risk of LA-style blazes
PropTrack: The hidden cost of flood risk to Victorian home values
Responses from the more than 1500 Australians surveyed also found one in seven were paying home insurance premiums greater than a month of their household’s average income.
It follows Insurance Council of Australia data released last month showing extreme weather events in 2025 cost almost $3.5 billion in insured losses from 264,000 claims.
Climate Councillor and economist Nicki Hutley said the big concern was the 22 per cent of people considering giving up insurance.
Contrasted with Australian Prudential Regulation Authority insurance policy number data, it would equate to close to 3 million households.
Homes in flood-prone areas often have the highest insurance costs, or cannot get coverage at all. Picture: Brendan Radke.
Ms Hutley said many would likely be in lower socio-economic wealth areas with high risk from flooding and other disasters and the nation was on track to “see a lot more” consider giving up insurance.
The economist said the poll was a “blunt reminder that climate pollution is already costing us” and that governments at all levels needed to start taking greater action to build resilience in at risk areas around the country.
“There will be some areas where the government can make it economical to support communities to make them more insurable,” Ms Hutley said.
“We can reduce risk and that will reduce the risk of increased insurance costs.”
She said a fractured Coalition was giving the federal government a perfect opportunity to tackle fresh issues that would make a difference by funding levees around at-risk communities and other climate-caused disaster prevention measures.
Economist and Climate Councillor Nicki Hutley says government intervention is needed in 2026 to avoid insurance bill pain growing worse and leaving more homeowners at risk.
She said this could have a lasting impact on insurance costs for struggling households, and would be better than one off support payments for things such as energy bills.
“If you can’t do that now, then you will never be able to do it,” she said.
She pointed to the Victorian government that had implemented extensive rental reforms in recent years despite it being unpopular with property investors.
“The market is moving, but it’s at an incredibly incremental pace, we need more action from governments to really address this,” Ms Hutley said.
“We can’t still be doing this in 12 months time.”
There are also fears for what a reduction in insurance levels could mean for health and safety, with Emergency Leaders for Climate Action founder and former NSW fire chief Greg Mullins revealing he was hearing suggestions those without cover would be more inclined to stay and fight fires at their homes.
Respected firefighter Greg Mullins fears what an increase in uninsured homes could mean for the decisions those owners make during fire events. Picture: Richard Dobson.
“Anecdotally I know and have heard of many people who have stated that they would ‘stay to fight as we’ll have nothing left if we lost it’,” Mr Mullins said.
“From my perspective, that’s really worrying as fires are increasing in intensity and destructiveness.”
Insurance Council of Australia chief executive Andrew Hall said Australians had long proven they saw the value in insurance and that Australian Prudential Regulation Authority data showed policy numbers were rising.
“But it (cost) has gone up a lot in recent years due to inflation,” Mr Hall said.
He noted that maintaining insurance was a condition for most mortgages, but that in high risk areas for flooding in particular there were growing issues with the cost of insurance which they were raising with governments at federal, state and local levels.
Insurance Council of Australia chief executive Andrew Hall believes a government review of insurance taxes could have the fastest impact on premium costs.
Using the nation’s $1bn Disaster Ready Fund to install levies and similar infrastructure could provide a way to allow for better insurance outcomes, with Mr Hall arguing risk reduction was the best way to reduce premiums at large.
“If we don’t do something about it, it will keep growing and getting more expensive to fix,” he said.
Mr Hall added that governments were also driving up insurance costs by continuing to charge stamp duty every time a household renewed their policy, as well as GST, leading to 20 per cent of the cost of insurance being taxes in most parts of the nation — and more than 30 per cent in NSW where there is a further emergency services levy.
“If you wanted to create immediate relief, you would reform that,” Mr Hall said.
He also acknowledged that the industry was reliant on rising numbers of policies to mitigate further cost hikes for existing insurance holders.
A combination of fires across Victoria as well as storms in NSW and Queensland in recent months could be impacting home insurance bills in the near future.
“The premiums of the many, pay the claims of the few,” Mr Hall said.
The YouGov polling connected with 1508 Australian voters, including 1081 with home and contents insurance policies active, during January.
It achieved representative levels across differing genders, ages, regions, incomes and educations.
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: RBA interest rate shock: $1m borrowers to be hit by $1900 hike
Climate Council: Australia’s most uninsurable areas, millions of properties face cost hikes
Single mum faces homelessness after entire Victorian town she lived in is put up for sale
English (US) · 