Why do insurance premiums change?

Insurance premiums can change over time, and there are several factors that play a role in determining the cost of your cover.

Understanding what influences your premium can help you make informed decisions about your policy and identify what you can manage.

What is
An insurance premium and why does it change?

The cost of your insurance is called the 'premium'. It's the amount you pay for your insurance policy and will depend on many factors.​

We’ll calculate your premium based on:​

  • your risk ​
  • the AAMI Flexi-Premiums® excess you choose, and​
  • the type of insurance and Optional covers that you choose.​

The premium you pay is also affected by other things including (but not limited to):​

  • the cost of claims we’ve paid to other customers and claims we expect to pay in the future

  • our expenses of doing business

  • insurance market conditions

  • compulsory government charges such as stamp duty and GST, and

  • Fire Services Levy, where applicable.

This isn’t a list of all our risk factors. The factors we use can change and how these factors combine to affect your premium will differ from person to person. 

This is also why it may change at your policy renewal.

Manage your policy

What this page covers:

What affects premiums?

How you can manage your policy.

Market conditions

Premiums may also be influenced by factors including (but not limited to):​

  • inflation
  • supply chain constraints (like repairers, parts or materials), and
  • weather events.

Another impacting factor is the price of reinsurance. This is basically insurance for insurers so we can ensure we’re ready to help Aussies when big events come our way.​

After we calculate the amount that it’ll cost to cover your insurance policy, we apply mandatory government taxes and charges to the premium. ​

  • GST
  • stamp duty, and
  • levies.

As these are based on government taxes and charges, they may change over time.

Home Insurance

Sum Insured

The sum insured is the actual amount you’re covered for and is the most you can claim for any one incident unless stated otherwise on your policy.

Depending on your policy, you’ll have either a home building sum insured (except if you have AAMI Complete Replacement Cover), contents sum insured, or both. 

You choose the sum insured when you first purchase your cover and can change it during your period of insurance if you need to. Your Sum Insured will be noted on your Certificate Of Insurance.​

As the price of repair materials which would be used for repairs increases, so does the cost of repairs overall. To protect you against the risk of underinsurance, we may choose ​to adjust the home’s sum insured at the end of your period of insurance. This is also to account for various factors including inflationary trends in building materials and labour costs. However, you still need to consider if the sum insured is suitable to you.​

This means the sum insured may need to increase when renewing your insurance to provide the same level of cover, otherwise there is a risk of underinsurance.

Avoiding Underinsurance

Location

Your location plays a big role. In some areas of Australia, natural disasters or severe weather events may happen more often, which translates to a higher premium for that location.

Areas with higher levels of theft, vandalism and other incidents will also affect your premium​.

Property characteristics and building materials

Your premium may be affected by things like:

  • the building’s age
  • the building’s size, and
  • the construction of the building.

The materials used to build a home will affect the premium charged, particularly the roof and walls.

Weather events

Weather events like fires, floods and storms are getting more severe. This means that the cost to rebuild homes and replace contents following these events may be changing, and that’s then reflected in your premium.

This change is so that insurance companies can continue to help Aussies recover after severe weather events.

Claims

The total number of home claims across Australia which we receive may cause premiums to change.

If big events occur, like massive floods or fires during hot summers, and we need to assist in the repair or rebuild of thousands of homes, then future premiums may be impacted.

That’s so we can provide continued support to Aussies when they need it.

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How to
Manage your insurance so it’s right for you

Make sure your details are all up to date

It’s easy to renew your cover without reviewing it, but it’s always a good idea to double check and make sure your details are up to date and accurate. Here are a few examples:​

  • If your driving habits have shifted since you took out your policy, and the number of kilometres driven has changed, you might want to ensure that’s reflected in your policy.
  • Check that the listed drivers are capturing all the regular drivers of your car. Refer to the Additional Information Guide for information regarding excesses that apply for different drivers.
  • If your car was under finance when you took out your car insurance, but you’ve since paid off the loan, ensure your policy reflects this.
  • If your home has been renovated recently, make sure the sum insured is still sufficient for your updated space and the things in it.
  • Review your optional covers so that your policy still has everything you need. If a change is required, you can add or remove optional covers to fit your circumstances.

You can easily manage your policy online. When reviewing your policy, you should always consider your own personal circumstances. By making sure your details are accurate, you can help ensure you policy is right for you.​

Update and renew your policy

Excess

Did you know you can vary your excess? AAMI allows you to choose the excess amount on your policy to suit your needs.

You can lower your premium by increasing your AAMI Flexi-Premiums® excess. Keep in mind that choosing a higher excess will mean you'll need to pay this at claim time. It’s about finding the right balance for you. 

Note that any AAMI Flexi-Premium® excess is on top of the standard excess, so consider your needs before making a decision! Read the Additional Information Guide for further info.

Paying by Instalments

When your premiums are paid upfront annually it is cheaper. Should you choose to pay monthly, a higher premium is charged.

Paying your premium in one lump sum (annually) is cheaper than paying by monthly instalments.  By opting to pay for your policy with an annual payment you can lower the total premium you pay.

Home policies only

Sum Insured

Ensure your sum insured reflects the right amount for your needs — no more, no less.

Overestimating means paying higher premiums, while underestimating could leave you at risk of underinsurance, which means you may not be able to meet the costs of rebuilding your home in the case of a total loss claim.

If you adjust your sum insured your premium will change as well.

If you need a little help with finding out how much your sum insured should be, for either a complete home rebuild or full contents replacement, you can use AAMI’s home building calculator or contents calculator.

Explore AAMI’s sum insured calculators

AAMI Complete Replacement Cover

Complete Replacement Cover is an alternative to setting a specific building sum insured. If you have this optional cover on your policy and your house needs to be repaired or rebuilt after an insured event, we’ll offer:

  • to do so and complete this on a 'new for old' basis, or
  • pay you the amount of our builders assessed quote to repair or rebuild on a 'new for old' basis without you having to set a specific sum insured.

Choosing this option can change your premium, but you won’t need to worry about being underinsured!

Save on your combined Home and Contents Insurance

If you insure both your building and contents together with us for the same address on the same policy, you can save up to 10% off the combined premium. If you're starting a policy with us, you can simply buy a combined policy. Otherwise. if you already have a policy with us, you can add the other to your existing policy during the period of insurance.

This discount is only applicable to AAMI Home Building Insurance and Home Contents Insurance products.^

Disclaimer

The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.

The information provided is accurate and true as of 16/07/2025, noting we may change our pricing practice (and the premium factors) from time to time.

Home

AAMI Home Building and Home Contents Insurance, Fire and Theft Contents Insurance, Landlord Insurance and Strata Insurance, are issued by AAI Limited ABN 48 005 297 807 trading as AAMI. Read the relevant Product Disclosure Statement or Policy Document before buying this insurance. The Target Market Determination is also available. This advice has been prepared without taking into account any person’s particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it.

^Discounts are also a factor that can affect your premium. The premium you pay for your insurance includes any discounts we have given you. Any discounts are applied in a set order and before Government taxes and charges.​

If you are eligible for more than one discount, we usually apply any subsequent discount to the already discounted premium.

Discount is not applied to Optional Personal Valuables cover, AAMI Excess-Free Glass cover or AAMI Home Assist.

Motor

AAMI Car Insurance, Motorcycle Insurance, NSW and SA CTP Insurance, ACT MAI Insurance and Caravan Insurance are issued by AAI Limited ABN 48 005 297 807 trading as AAMI. Read the relevant Product Disclosure Statement or Policy Document before buying this insurance. The Target Market Determination is also available. This advice has been prepared without taking into account any person’s particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it.