Sydney homeowners stung by hidden insurance costs
An industry blacklist has revealed homeowners in some Sydney suburbs are being hit with extra costs in a move likened to ‘a postcode lottery on steroids’.
They’re the postcodes where homeowners are getting stung with a hidden annual premium of up to $4000 a year – on top of the lofty mortgage repayments and council fees they already pay.
And it’s a charge homeowners have little chance of escaping as it’s a condition of their loans.
Analysis from Finder.com.au has revealed an alarming rise in home insurance premiums across Sydney, with certain city pockets now insurance money pits where premiums are much higher.
Many of these areas are concentrated in Western Sydney, where residents are enduring some of the highest rates of mortgage stress in the country.
Finder insurance expert Peta Taylor said the charges in certain areas amounted to a “postcode lottery on steroids”.
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“It’s striking. We’re talking about families in outer metro Sydney paying more for insurance than those in some of Melbourne’s most prestigious postcodes,” Ms Taylor said.
Sydney home insurance premiums were the highest in Parramatta, with the average annual charge at nearly $4400, according to the Finder study.
These premiums were close to double the $2000 average amount homeowners were paying for insurance nationally in 2024 and well above the $1700 average annual premium in 2023.
Other Sydney areas where insurance costs were inflated included the Hills District ($3300 on average), Canterbury-Bankstown ($3200) and Ryde ($3100).
Premiums in the Burwood area of the inner west averaged about $3900 a year and were a similar amount in the north shore council area of Ku-ring Gai.
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The explosion in insurance costs is significant because banks demand building insurance as a condition of providing finance.
Banks can also, in some instances, take action against homeowners who stop paying insurance cover on their mortgaged home.
“For a lot of people, insurance isn’t something they think about until after they’ve settled into their new home. And by then, the shock of a (high) policy can be overwhelming,” Ms Taylor said.
Finder revealed higher premiums in some areas came down to the cost of labour and building in each market, crime rates and higher claims rates attached to the suburb.
“In a nutshell, higher premiums (mean) the insurer has attached a higher risk to that postcode for one reason or another,” Finder said.
Research from Compare the Market showed Sydney home and contents insurances costs rose nearly 6 per cent over the last six months, adding about $125 to average annual premium.
Compare the Market economic director and former Sunrise host David Koch said a string of weather events like ex-Tropical Cyclone Alfred were seeing costs passed onto to all Aussie insurance clients.
“The repair bills for these major weather events can blow out to billions of dollars, which has an impact on future reinsurance costs, which are ultimately passed on to consumers through higher premiums,” Mr Koch said.
“Insurance costs have been one of the biggest contributors to inflation over the past few years as the rise of natural disasters has been compounded by rising construction and labour costs.”
Finance expert Sarah Megginson recently got slumped with a $2000 annual increase in her insurance bill, which took her premium to $5100 a year, and said she wasn’t happy.
“When I called the insurer and asked why my premium had gone up so drastically, they said they couldn’t pinpoint a specific cause, but perhaps the risk profile in my suburb had changed,” she said.
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“They gave me the option to increase my excess and reduce the amount of cover I’m eligible for, and that brought the policy down about $500.
“I wasn’t happy to pay so much more for the exact same cover, or to reduce my cover and still pay $1,500 more. So, I compared online, shopped around and found a policy with another insurer for the same excess, same dollar value of cover, at a price point of $2,850.
“My experience really shows how much money we leave on the table when we don’t compare our options and simply pay the renewal when it comes in.”
SYDNEY AREAS WITH HIGHEST HOME INSURANCE PREMIUMS
| Region | Avg. annual home insurance premium | Median house price |
| Parramatta | $4,384 | $1,835,000 |
| Burwood | $3,911 | $2,560,000 |
| Ku-ring-gai | $3,864 | $3,320,000 |
| Hornsby | $3,488 | $2,020,000 |
| The Hills Shire | $3,279 | $1,851,000 |
| Waverley | $3,254 | $4,415,000 |
| Northern Beaches | $3,253 | $2,671,000 |
| Canterbury-Bankstown | $3,165 | $1,480,000 |
| Woollahra | $3,147 | $5,000,000 |
| Ryde | $3,126 | $2,510,000 |
Source: Finder.com.au
Originally published as Sydney homeowners stung by hidden insurance costs