My home insurance went up $1,079.74, and why I didn't just pay it

Vanessa is a guest contributor. She is a budget-conscious content creator who shares practical ways to save money and make the most of the household budget, from savings on everyday expenses to affordable meals, gardening and simple money-saving ideas. Here she walks through what happened when her home insurance renewal landed, and the numbers behind what she did about it.

Insurance is one of those household expenses that quietly rolls over. You set up a policy, pay it each year, and assume things stay much the same.

Then the renewal lands and the premium has jumped, even though nothing about your circumstances has changed.

That happened to me. My home insurance renewal went from $2,369.99 last year to $3,449.73 this year.

Nothing about my property or my situation had changed. That was enough to make me stop and ask why I should simply accept it.

Don't renew on autopilot

When a renewal arrives it is tempting to pay it and move on, because insurance matters and nobody wants a gap in cover.

A large increase is exactly the moment to look properly. Compare what you are paying now against what other insurers quote for similar cover, and you may find comparable cover for noticeably less.

Check what you are actually covered for

A renewal is also a good prompt to check the policy still matches your life.

Try not to fix a high premium by quietly cutting your cover. A cheaper policy is not a saving if it leaves you short at claim time. What you are after is the balance between cover that suits you and a premium you can afford.

Shopping around is worth the time, because staying loyal does not always mean getting the best price. If your current insurer turns out to be competitive once you have compared, that is a good outcome too. The point is that you checked.

Monthly or yearly? Check the total, not the instalment

Once you have settled on cover, there is a second question that costs real money: how you pay for it. On my home and contents policy, paying yearly was cheaper than paying monthly.

That is $481.77 for choosing one payment option over another on the same cover. Instalment costs and fees vary between insurers, so check the total annual cost of each option on your own policy before you decide.

How I budget for a yearly bill

Paying yearly only helps if the money is there when the bill arrives. So rather than finding $2,400 in one hit, I spread it across the year.

I transfer $100 into a separate savings account every payday and leave it there until the insurance is due. Rounding $93.01 up to $100 builds a small buffer for the next increase, and premiums rarely go backwards. Any interest it earns while it sits there is a bonus.

The whole habit in one line: pay yearly, put aside $100 a fortnight, and have the money ready when the renewal arrives. No scramble for a lump sum, because it is already budgeted.

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Why a few hundred dollars matters

Saving on a large annual bill shows up in the weekly budget. A $500 a year saving is more than $40 a month staying in your pocket, and that can go to groceries, other bills, savings or paying down debt.

When living costs are rising, finding money in the expenses you already have is often easier than finding extra income.

The lesson I took from it

Regular bills do not stay still. Insurance, electricity, internet and phone plans all drift, which is why reviewing your major bills once a year is worth building into your routine.

You do not have to switch anything. You check, you compare, and you make an informed decision. For me the lesson was simply not to accept a higher bill because it is a bill I have always paid.

A few minutes of checking can be worth hundreds of dollars, and that is money I would rather keep.

Key points

• A renewal that jumps sharply with no change to your circumstances is worth checking rather than paying automatically.
• Compare similar cover elsewhere before you renew, and be careful about cutting cover just to cut the premium.
• Check the total annual cost of paying monthly against paying yearly. On this policy the difference was $481.77.
• If you pay yearly, set the money aside each payday so the bill is already covered when it arrives, and round the amount up to build a buffer for the next increase.

This article is general information only. It does not take your objectives, financial situation or needs into account, and it is not a recommendation to take out, change or cancel any particular policy. Read the relevant Product Disclosure Statement and Target Market Determination before deciding. The figures here are the writer's own and your circumstances will differ. WeMoney Pty Ltd (ABN 88 633 007 860) holds Australian Credit Licence 526330 and does not hold an Australian Financial Services Licence.