Home Insurance

Home underinsurance is common and can leave owners facing large gaps between what their policy pays and what it actually costs to rebuild, repair or replace a home and its contents. Understanding “sum insured”, replacement costs and policy clauses such as coinsurance can help households avoid financial distress after a major loss.

A cross-sector proposal would link home resilience upgrades to lower insurance premiums and potentially cheaper lending, as more households face affordability stress driven by rising disaster risk and building costs.

Major insurers have stopped issuing new home policies in California, echoing a longer-running pattern in hurricane- and flood-prone states such as Florida. Rising disaster losses, surging reinsurance costs, and regulatory constraints are reshaping what insurers can offer—while states expand last-resort coverage that ultimately shifts risk to taxpayers.

Climate change is pushing home insurance premiums higher and making coverage harder to secure. California has responded by allowing insurers to use forward-looking catastrophe models when setting premiums—on the condition they expand coverage in high-risk areas. Australia is already taking steps on affordability and reinsurance, but may need to consider similar reforms focused on stable pricing, continued access to cover, and incentives for safer homes.