Revealed: Five things pumping up your insurance premiums

Queenslanders already suffering from the cost of living crunch are about to feel even more pain.

Garry Henry sweeps flood water out from a house at Caravonica, Cairns following ex-Tropical Cyclone Jasper which caused major flooding last December. Picture: Brendan Radke

Insurance premiums are on the rise, and insurer Suncorp has warned the rush to meet Australia’s housing shortage risks baking in the potential for property damage and disasters are a significant concern for homeowners.

The insurer flagged premiums were due to rise to meet surging inflationary costs, but also flagged other crucial issues affecting policy holders.

Chief executive Steve Johnston said the insurer was seeing an increasing number of claims tied to poor property design and building materials, warning Australia risked future problems amid the construction sector crunch.

Suncorp Insurance chief executive Steve Johnston said poor buildings and materials were a big contributor to premiums rising.

Here are five key issues pumping up insurance prices.

Extreme weather

An Insurance Council of Australia spokesman said extreme weather events were a major cause of rising insurance premiums.

“Wherever you live in Australia – whether you’re directly exposed to extreme weather impacts or not – insurance premiums are rising because of the escalating costs of natural disasters,” the spokesman said.

Eddie Wickham sweeps water out of a house in Cairns following extreme flooding. Picture: Brendan Radke

“The only sustainable way to moderate rising premium costs is to reduce the cost of extreme weather impacts, and this largely requires action and investment by governments at all levels.”

Plumbing

New builds typically have more bathrooms or built-in appliances that can often lead to water leaks, the Suncorp Group explained on Monday.

Master Plumbers’ Association of Queensland deputy chief executive Ernie Kretschmer warned water leaks, cracked pipes or faulty fixtures and appliances could see premiums rise.

“Any insurance claim has the potential to cause an increase in insurance premiums,” he said.

Returning to the office

Mr Johnston said new builds typically had more bathrooms or built-in appliances that often lead to water leaks ultimately, causing more damage. He called out open plan homes as making the issue worse, along with many homeowners now returning to the office leading to the damage going unattended for hours.

Office workers throughout the Brisbane CBD. Picture: David Clark

Mr Kretschmer explained issues such as the incorrect installation of taps or pipes left unattended could cause huge amounts of damage in the long run.

“All flexible braided hoses should be checked regularly for any signs of damage, rust, discolouration or kinks. If anything looks or feels out of the ordinary, you should contact a plumber to check and or replace the hose,” he urged.

“It should also be noted that it is illegal to perform regulated plumbing and drainage work without holding a licence, plumbing is not DIY. Homeowners performing regulated plumbing or drainage works could void their insurance.”

Lithium-ion batteries

While they may be small, Lithium-ion batteries could be the reason hundreds of dollars are added onto Australians’ insurance premiums.

On Tuesday, Brisbane City Council released a warning of the dangers associated with the incorrect disposal of Lithium-ion batteries after releasing video one exploding after being compressed at a local tip.

Mr Johnston said lithium batteries had potential to cause significant damage.

Suncorp Group chief executive Steve Johnston explained lithium battery fires were causing significant home damage too — “at a far greater rate than they’ve ever been”.

He explained houses were being built closer together, as blocks got split, meaning eaves were positioned close together too. The proximity could mean the damage in one home could consequently impact several nearby houses in the street.

Building quality

The urgency of getting more housing stock into the market was another concern pinpointed by the Suncorp Group chief executive.

Mr Johnston explained new builds could likely be rushed, which could lead to builders cutting corners with added fixtures or built-in appliances.

Rushed builds could lead to damage down the track for homeowners.