Home insurance is a complicated product. It can be difficult enough trying to understand what your own policy covers you for, let alone trying to compare one with another. CHOICE has been comparing home insurance policies since the 1970s, and in that time we've learned a few things about what sets a policy apart from the rest.
On this page:
- How we choose which insurers to compare
- How we collect product data
- How we calculate our price rating
- Why we don't compare the claims experience or customer satisfaction
CHOICE home and contents insurance comparison at a glance
- 11 insurers
- 35 brands
- 51 products
- Up to 5330 quotes per product
- Over 300 product feature dimensions measured
How we choose which insurers to compare
The insurers we choose cover the majority of the home insurance market in Australia and range from brands written by the Big Four insurance agencies to smaller local insurers and newer entrants to the market.
Big Four
- Suncorp (AAMI, Apia, GIO, Suncorp)
- Allianz (Allianz, Bank of Melbourne, BankSA, NAB, St.George, TIO, Westpac)
- IAG (CGU, NRMA, SGIC, SGIO, RACV)
- QBE (ANZ, QBE)
Newer entrants
- Auto & General (Budget Direct, ING, Qantas, Virgin Money)
- Hollard (Australian Seniors, Bankwest, CBA, Huddle, Kogan, Real Insurance, Woolworths)
- Youi
State motoring groups
- RAA
- RAC
- RACQ (Honey, RACQ)
- RACT
How we collect product data
The terms and conditions of a home insurance policy are detailed in a document called the Product Disclosure Statement (PDS). These can be long, complicated reading, and because they aren't of a uniform design it can be difficult to compare one insurer's product to another.
To get the data we need, we developed a product feature questionnaire that asks everything from whether you're covered for flood to how much your barbecue would be covered for if it got stolen from your deck. All up, that's about 330 questions across the following categories:
- How you can purchase a policy
- Building replacement cover and underinsurance safety net
- Cover for standard insured events (such as fire, flood, theft)
- General contents item limit
- Legal liability cover
- Portable contents cover
- Cover for motor burnout
- Key and lock replacement
- Cover for garden plants
- Additional costs to rebuild (debris removal, demolition, complying with building regulations, mortgage discharge fees, professional fees)
- Cover for temporary accommodation
- Cover for digital media
- Cover for cash
- Cover for artworks
- Cover for collections
- Cover for jewellery
- Cover when moving house
- Cover for contents in the open air
- Cover for visitors' contents
- Cover for spoiled food
- Cover for vet bills
- How you can make a claim
- How the insurer handles cash settlements
Whenever an insurer issues a new PDS, our insurance experts compare it to the old one and update the answers to the questionnaire. Our database churns the answers and produces our comparison table. To make sure we haven't got anything wrong, our in-house verification team double-check any big changes or additions. We also send a draft of the report to insurers for them to correct.
How we calculate our price rating
The price rating indicates how expensive a home insurance policy is, on average, compared to other policies. A policy may be given a price rating out of 5, represented in the comparison table by dollar signs. More dollar signs means a policy is more expensive.
We don't calculate a national price rating, because an insurer that's cheap in one area might be very expensive in another. Instead, we compare price at the state and territory level.*
We obtain pricing data from Finity Consulting, a firm that collects and sells its data to the insurance industry. If an insurer doesn't participate in Finity's quote collection program, we can't compare them on price.
We don't calculate a national price rating, because an insurer that's cheap in one area might be very expensive in another. Instead, we compare price at the state and territory level
Each quarter Finity releases a new batch of pricing data. For home and contents insurance, quotes are collected for 5330 different customer profiles per product. The profiles cover a variety of factors such as customer age, address, sum insured, building size and construction materials. A standardisation method is applied so that policies with a lower default excess aren't penalised (lower excess usually means higher premium).
If the web-scraping bot is unable to obtain a quote, this is called a failed quote. In a small minority of cases a quote fails due to bot error, but if there is a trend this indicates an insurer is refusing to underwrite what they consider to be high-risk customers in that market. We apply a scoring penalty to policies with high failure rates.
Individual quotes are assigned a score of 0 (least expensive) to 100 (most expensive) compared to quotes from other policies for the same profile. We then calculate the policy's average quote score per market. Every 20 points on this scale is worth one "$" in the price rating.
*In Queensland we go even further and treat the cyclone-prone parts in the north of the state as their own market. This reflects how the industry treats the state: many insurers who sell policies in the south-east don't operate north of Rockhampton.
Why we don't compare the claims experience or customer satisfaction
In short, it's because reliable data doesn't exist to look at either metric. Financial regulators are in the process of developing a data collection process for claims handling. When this data begins to be published, we'll know things like what percentage of claims are accepted, and how long on average an insurer takes to settle a claim.
The Australian Financial Complaints Authority (AFCA) publishes a dashboard summarising the complaints they receive. However, the data is not easily extracted, and we have concerns that the tool doesn't give enough information about an insurer's market share for us to compare them on a like-for-like basis.
Stock images: Getty, unless otherwise stated.
