As the cost of living continues to bite, high insurance premiums are hitting Australians particularly hard.
Unfortunately, home and contents insurance is not one of those things you can simply strike from your household budget – it’s wise to ensure your assets are covered in the event of minor or major disasters.
But it’s also wise to ensure you’re getting the best deal.
It’s vital you have a good-value policy you can rely on, and not one that’s over-priced, lacks basic features or has sneaky exclusions
And as you’re forking out hundreds or thousands of dollars each year for cover in the case of things like fire, flood or theft, it’s vital you have a good-value policy you can rely on, and not one that’s over-priced, lacks basic features or has sneaky exclusions.
The home and contents insurance policies to avoid
CHOICE experts have compared more than 100 home insurance policies across the market to help you find the one that best suits your needs and budget. We score each policy by balancing the cost with the features it offers, including cover limits and exclusions.
Unlike other insurance comparison websites, we’re completely independent and don’t get paid by any of the insurers we’re comparing.
That means we’re also willing to call out the policies that we don’t recommend because they don’t offer good value or have weird exclusions.
Unlike other insurance comparison websites, we’re completely independent and don’t get paid by any of the insurers we’re comparing
We don’t want you to end up with a dud policy, so here are the products that were amongst the lowest scoring in our review, and which CHOICE experts say you should be wary of.
CHOICE insurance expert Daniel Graham says: “In our latest comparison, we’ve found 12 different insurance products that are particularly bad, scoring 53% or less, which we recommend consumers avoid. Two are extremely expensive and don’t give you good value, while the other 10 all share a lot of poor cover features in common (they’re also all from the same underwriter, Hollard).”
These include policies offered by Woolworths Everyday Insurance, Bupa, Huddle, AHM, GIO, RAA and Real Insurance.
Daniel says that many Australians don’t realise that while insurance policies may be branded differently or sold by different providers, such as your favourite supermarket, your bank or health insurer, they are often essentially “white-label” products backed by the same underwriter, so there are often policies with identical cover being sold at different prices.
“This means it’s really important to compare a policy before you buy,” says Daniel. “Check what you’re covered for and how the policy measures up, who the underwriter is, and whether you can get better value for money by switching to a different brand or provider.”
“We consider a huge breadth of features in our comparison and give each policy a score based on the features it offers and what it costs. At the bottom of the list we have some low-scoring barebones policies that charge more than they should for some of the lowest coverage levels in the market.”
Consider becoming a CHOICE member to see the best performers.
The first ten policies listed above are all underwritten by Hollard. They all offer budget coverage without the budget price tag. These are:
AHM (Basic and Comprehensive)
Bupa (Basic and Comprehensive)
Everyday Insurance (Standard and Comprehensive)
Huddle (Basic and Comprehensive)
Real Insurance (Essential and Top)
There is poor cover across other features as well, illustrating the importance of paying close attention to a policy’s PDS before you buy
Daniel Graham, CHOICE insurance expert
Despite the different names, the Comprehensive policies (called “Top” by Real Insurance) are quite similar to the basic policies. They come with accidental damage cover and some higher sublimits, but there’s otherwise not much to differentiate the two cover levels.
The accidental damage cover actually gets an excellent score, but the gains there are offset by the higher price for the comprehensive cover.
Some bad points CHOICE experts noted about all of these policies include:
No underinsurance safety net, which is a feature that provides a buffer of extra coverage beyond your nominated sum insured if the cost to rebuild or replace your property after a total loss is higher than expected. This usually adds a percentage (e.g. 10% to 30%) to your sum insured for a total loss.
No cover for animal damage. For example, if a wild bird flies into your home and gets trapped, causing damage to a window or contents while trying to escape. Most insurers treat this as a distinct insured event.
“New for old” cover excludes clothing, computers more than four years old, household linen, items out of use/stored away and shoes (they do however say they will cover the reasonable market value for these items based on age and condition).
There is poor cover across other features as well, illustrating the importance of paying close attention to a policy’s PDS (product disclosure statement) before you commit.
The mid-level policy that is just too expensive: RAA Home and Contents
CHOICE experts say that if you have the RAA Home and Contents policy (underwritten by Allianz), you’re paying too much for what is essentially average cover. It has a 10% underinsurance safety net for building and contents cover, which is a plus, but it’s still lower than that offered by other insurers.
In terms of cover, RAA is in the middle of the pack. One upside is that they don’t have long lists of cover exclusions or restrictions, but when they do apply a sublimit it tends to be on the low side. This would be acceptable if it weren’t for the price, which is too high for cover of this quality.
Other downsides include no cover for any plants in the ground including lawns, trees, plants, shrubs or hedges, and low cover for contents you have outdoors in the open air. It also offers low cover for temporary accommodation, which you might need if your home is damaged or uninhabitable by an insured event.
This RAA policy has a 10% underinsurance safety net for building and contents cover, which is a plus, but it’s still lower than that offered by other insurers.
You should also beware of taking cash settlements with this insurer, as CHOICE experts say you could find yourself out of pocket.
A cash settlement is when the insurer gives you money to carry out the repairs or organise replacement contents yourself, rather than letting the insurer organise the works.
If repairs or replacements are available, and you agree to a cash settlement instead, the amount offered will be what it costs RAA to fix the damage – but not necessarily what it will cost you to fix it yourself. Because of the deals insurers have with their networks of repairers, the prices available to them are often lower than market prices.
RAA doesn’t want to pay full price for a cash settlement, so they reserve the right to offer the lowest price possible, even if this isn’t a price you’d be able to access yourself.
The policy that offers better cover, but for a premium price: GIO Platinum
There is one policy in our list of low-scorers that looks very good on paper but has been priced out of contention.
GIO Platinum offers top performing cover, receiving a cover score of 74% which is amongst the best in our comparison. However, it was the single worst performer on price, meaning you’ll find better value elsewhere.
Daniel says: “This policy is significantly more expensive than comparable “premium cover” policies, even a near-identical product from the same underwriter. We compared GIO’s quotes against its competitors at nearly 2300 addresses, and this policy was the most expensive in a quarter of scenarios.
“No matter which insurer you are currently with, if you haven’t switched for a while, you’re likely missing out on savings.
“If you’re willing to put in the effort you could theoretically change your insurer every year or so to take advantage of discounts available to new customers. But this only pays off if you make sure you’re switching to a good-value policy every time.”
Save on insurance. Get the best value on home and car policies with our free expert guide.
Pru Engel is the Audience and Engagement editor at CHOICE. Her job is to ensure as many Australians as possible know about the great work we do at CHOICE.
She works closely with our testers and experts to find the gems of information in our data and research that will resonate with Australian consumers and help them make the best decisions, whether they're purchasing an air fryer, looking for a new mattress or trying to find the cheapest car insurance. She also helps to drive meaningful change for consumers by collaborating with our Campaigns team on content covering issues such as grocery pricing, product safety and scams.
Prior to CHOICE, Pru worked as an editor at many of Australia's leading food and lifestyle titles.
Pru has a Bachelor of Arts in Communication (Journalism) from the University of Technology, Sydney.
Find Pru on LinkedIn.
Pru Engel is the Audience and Engagement editor at CHOICE. Her job is to ensure as many Australians as possible know about the great work we do at CHOICE.
She works closely with our testers and experts to find the gems of information in our data and research that will resonate with Australian consumers and help them make the best decisions, whether they're purchasing an air fryer, looking for a new mattress or trying to find the cheapest car insurance. She also helps to drive meaningful change for consumers by collaborating with our Campaigns team on content covering issues such as grocery pricing, product safety and scams.
Prior to CHOICE, Pru worked as an editor at many of Australia's leading food and lifestyle titles.
Pru has a Bachelor of Arts in Communication (Journalism) from the University of Technology, Sydney.
Find Pru on LinkedIn.
For more than 60 years, CHOICE has been fighting the good fight for Australian consumers.
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