Melbourne and Victorian homeowners forced to pay for flood

October 31, 2012

Melbourne and Victorian homeowners are paying for the pain of floods, fires and cyclones with price hikes over 600% on insurance premiums. 

Budget Direct CEO Ram Kangatharan said the skyrocketing premiums were partly due to mandatory flood cover inclusions, and many insurers were not giving customers the option to opt-out of flood cover and refusing to insure homes without it. 

“Many insurers are not giving customers in Melbourne and Victoria the option to opt-out of flood cover even though they don’t want or need it,” Mr Kangatharan said. 

“Some insurers are failing to tailor risk effectively and blanketing entire suburbs as high-risk.

“We’re hearing stories of customers who live at the top of a hill which has never flooded and has no chance of flooding, but their current insurer is refusing to allow them to opt-out.

“The fact is, that more ninety per cent of Australia is not at risk of flooding, so why should people have to pay for flood cover if they don’t want or need it?

“Budget Direct doesn’t offer flood cover and those customers who don’t need it don’t have to pay for it when they come to us. 

According to a recent CANSTAR report in Melbourne and regional Victoria:

  • Insuring a $500,000 home is up 31% on average
  • Insuring a $300,000 home is up 28% on average
  • Insuring $75,000 worth of contents is up 19% on average
  • The largest single increase for a $500,000 home was 682%

“The truth is that there are insurers out there that will give you the option to opt-out of flood, but customers in Melbourne and Victoria need to shop around,” Mr Kangatharan said. 

“Naturally, we’re not saying that people should opt of out of flood cover if they live in a flood prone area, we’re saying shop around to find the best policy to suit your needs.

Budget Direct was established as an insurance provider in Australia in 2000. It is part of the international Budget Insurance group of companies headquartered in the British Isles. The Budget Insurance group of companies annually administers more than 3.5 million policies and $2 billion in premium. Auto & General Insurance Company Ltd underwrites Budget Direct’s policies.

The figures and table provided in this media release have been sourced from the CANSTAR Home and Contents Star Ratings report which compares 41 insurers and 104 policies using 10,000 individual quotes across the six Australian states. 

CONTENTS INSURANCE – Average premium increases for $75,000

State

Contents only 2012

Contents only 2011

Difference

Percentage

Maximum Increase

NSW

$698

$587

$111

19%

432%

QLD

$673

$507

$166

33%

828%

VIC

$561

$471

$90

19%

85%

SA

$407

$394

$13

3%

67%

WA

$533

$487

$47

10%

327%

TAS

$368

$344

$23

7%

59%

NATIONAL

$557

$477

$80

17%

828%

CONTENTS INSURANCE – Average premium increases for $150,000

State

Contents only 2012

Contents only 2011

Difference

Percentage

Maximum Increase

NSW

$1082

$810

$272

34%

918%

QLD

$903

$679

$224

33%

447%

VIC

$751

$636

$115

18%

446%

SA

$571

$560

$11

2%

97%

WA

$599

$572

$27

5%

87%

TAS

$466

$444

$22

5%

89%

NATIONAL

$738

$621

$118

19%

918%

BUILDING INSURANCE – Average premium increases for $300,000

State

Building only 2012

Building only 2011

Difference

Percentage

Maximum Increase

NSW

$848

$713

$135

19%

377%

QLD

$988

$764

$224

29%

181%

VIC

$694

$544

$149

28%

113%

SA

$522

$471

$50

11%

76%

WA

$875

$722

$153

21%

216%

TAS

$541

$490

$52

11%

69%

NATIONAL

$767

$632

$135

21%

377%

BUILDING INSURANCE – Average premium increases for $500,000

State

Building only 2012

Building only 2011

Difference

Percentage

Maximum Increase

NSW

$848

$713

$135

19%

377%

QLD

$988

$764

$224

29%

181%

VIC

$694

$544

$149

28%

113%

SA

$522

$471

$50

11%

76%

WA

$875

$722

$153

21%

216%

TAS

$541

$490

$52

11%

69%

NATIONAL

$767

$632

$135

21%

377%

For the full report visit http://www.canstar.com.au/images/star_ratings_reports/home-and-contents-insurance-oct-2012.pdf


For further information or interviews please contact Brad Seymour, Director Partnerships & Communication, Budget Direct (Auto & General) at 07 3377 8937  or mediaenquiries@budgetdirect.com.au

Budget Direct was established as an insurance provider in Australia in 2000.  It is part of the international Budget Insurance group of companies headquartered in the British Isles. The group provides more than 6.8 million policies to insurance customers and administers $2 billion in premiums annually. Budget Direct offers Motor, Home & Contents, Health, Life and Travel Insurance as well as Roadside Assistance.

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