Why are some households underinsured or uninsured?
Short answer
A household is underinsured when its cover would not pay the full cost of rebuilding or replacing what it owns. It is uninsured when it has no cover at all.
APRA estimates that around one in seven households in freestanding houses are uninsured today. About half of households surveyed by the ACCC rated their home insurance as unaffordable or barely affordable.
Four different measures
| Term | Meaning | Typical measure |
|---|---|---|
| Affordability stress | Premiums are high relative to income | Premium above a set share of household income |
| Underinsurance | Cover is too low to pay for a full rebuild or replacement | Sum insured below estimated rebuilding cost |
| Non-insurance | No cover at all | Share of households or houses without a policy |
| Protection gap | Losses that insurance does not pay | Share of losses not covered by insurance |
What the estimates show
Affordability stress. The Actuaries Institute estimates that 15% of Australian households, or 1.61 million, were in home insurance affordability stress in the year to March 2024, up from 12% a year earlier. It defines stress as a home insurance premium above four weeks of gross household income (Actuaries Institute 2024).
How households rate the cost. In a survey commissioned for its final insurance monitoring report, the ACCC found that around half of the households surveyed across Australia rated their home insurance as unaffordable or barely affordable, regardless of the cyclone risk they face (ACCC 2026).
Non-insurance. APRA estimates that around one in seven households in existing freestanding houses are uninsured today. The estimate excludes strata properties such as units and apartments. It is modelled, not observed. APRA treats a household as likely to be uninsured when its premium is above four weeks of household income. The estimate comes from APRA’s climate stress test, carried out with five large insurers that together write around 80% of home insurance by gross written premium (APRA 2026).
The Australia Institute estimates that in 2023, 344,523 Australian households had no home building insurance and 533,229 were underinsured, about 1 in 30 and 1 in 20 households (Thrower 2025). APRA’s estimate covers only freestanding houses and is based on an affordability threshold. The two use different data and definitions and are not directly comparable.
Projections. Under both of APRA’s climate stress scenarios, the share of uninsured households could rise to around one in four by 2050. That is about one million more households than today. By 2050, over 30% of households in regional centres and over 40% in rural areas may be uninsured. APRA states that these are stress scenarios, not forecasts (APRA 2026).
Reported reasons
The ACCC reported hearing that households and small businesses were increasing their excesses and reducing their cover in response to high premiums (ACCC 2025).
Home building cover pays up to the sum insured on the policy. ABS prices for new dwellings rose 41.3% over the five years to the September quarter 2026.
Consequences
APRA notes that a growing protection gap can lead to greater uninsured losses for households and banks, and higher fiscal costs for governments (APRA 2026).
Last reviewed 4 November 2026.