How to easily cut the cost of any insurance premium

3 hours ago 3

Opinion

October 11, 2025 — 5.07am

Mention insurance to any Aussie and you will see pain flicker across their face – premiums are now hurting budgets badly thanks to a collision of factors from rising health costs and an ageing population, to natural disasters.

Indeed, insurers have sustained losses of nearly $2 billion from three events this year alone: ex-Tropical Cyclone Alfred ($1.43 billion), the North Queensland floods ($289 million) and the NSW Mid North Coast and Hunter floods ($248 million), says the Insurance Council of Australia.

And insurers’ inflation-adjusted annual losses from floods, bushfires, storms and freezing temperatures have tripled in the past three decades. So – across the gamut of your insurance products – how can you keep vital protections but for lower prices?

Sure, insurance costs are escalating, but it’s better to finesse your policies rather than forgoing the financial safety they provide.

Way one: Up your excess. The fact is that any insurance on which you don’t claim is a success. People tend to get aggrieved by that, but it’s the very definition of life going well … and Murphy’s Law dictates that if you didn’t have the insurance, things probably wouldn’t have gone so smoothly for you.

But, pursuing that line of thinking, if you expect to (and indeed likely will) claim on most insurances infrequently, then a higher excess is a valid and powerful way of cutting the year-after-year cost. In fact, your savings will swiftly mount to cover the cost of that higher excess, if you do have to pay it.

This is an approach you can apply with virtually all general insurance and with private health, where you may not realise you can now have an excess as high as $750 as a single and $1500 as a family and still be exempt from the Medicare Levy Surcharge.

(And if you are thinking of dropping private health, remember that a single person who earns greater than $101,000, or a family or couple on more than $202,000, will pay that penalty – up to 1.5 per cent… an amount that could instead cover the cost.)

Way two: Decrease your contents insurance. When it comes to your sum assured – or how much you are covered for – you need to be incredibly careful.

There is no point paying a bunch of money for insurance that will never deliver in your time of need, whether that’s because it’s junk insurance or it’s inadequate.

Your most vital check is that your home insurance is sufficient to rebuild if it were destroyed. It’s prudent to check as well whether an insurer has something like a “safety net” or “rebuild protection” feature in case construction costs spike higher, say because there’s been a natural disaster in the area and demand is through the roof.

But contents might be an area where you can trim … because the cost of consumables has come way down, possibly since you last calculated the replacement value of yours.

Just check that you have sufficient items listed where they need to be, things like jewellery and laptops/phones/technology but bear in mind these increase costs significantly. I’d skip motor burnout as it is often a waste of money and not valid on older products.

What’s key though is that your contents includes decent public liability cover … this protects you if you are liable for some sort of injury outside your home, say on the golf course, and is a crucial part of a safe and sound defensive financial strategy.

Way three: Ditch agreed value. Is your car now pretty old? It might be worth dropping from agreed to market value or even switching to just third party, as you might be looking to replace it. That could free up some money to put to that purpose!

Way four: Increase your wait period. Specific to income protection insurance, the delay until you get paid hugely affects your premiums. Ideally, you would have alongside it an emergency fund for when stuff goes wrong.

The idea would be for a fund of perhaps three months’ salary to sustain you while you wait for your income protection policy to start paying out. Even a 90-day wait represents an incredible saving. Remember too, the income protection insurance is tax deductible.

Sure, insurance costs are escalating, but it’s better to finesse your policies rather than forgoing the financial safety they provide.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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