Millions of Australians would face financial ruin if their home was impacted by a natural disaster, while floods, fires and storms are growing in severity and frequency according to a new research by The Australia Institute.
The new 23-page research report published in May 2025 reveals that more than 800,000 households – home to more than 2m Australians – have not fully insured their home and nearly half of those who are not adequately insured find themselves in that predicament because of the soaring cost of insurance premiums.
The research found that the average uninsured homeowner owes more than A$283,000 on their mortgage, while those who are underinsured owe more than A$373,000. If their home was lost or badly damaged, they could find themselves staring at homelessness or bankruptcy. Adding to the risk, climate change is driving more natural disasters, prompting insurance companies to increase premiums exponentially.
The major findings of the research include the following:
- It found that 344,523 Australian households are not insured and 533,229 Australian households are underinsured.
- Mortgages on underinsured homes are worth a total of A$88.5bn, while those on uninsured homes are worth A$30.1bn. This amounts to nearly A$119bn in mortgages on inadequately insured owner-occupied properties.
- In 2022, nearly one in 20 Australians — the highest proportion on record — experienced the destruction of or damage to their home due to weather-related disasters.
The Australian Institute senior economist Jack Thrower said, “More than two million Australians live in properties without full insurance. Many have mortgages and risk losing almost everything if they’re hit by a flood, fire or storm.
He said, “Banks in Australia hold over A$100 billion in mortgages on inadequately insured properties. Not only does this pose a risk to indebted homeowners, it’s also a risk to the health of the Australian economy.”
Mr Thrower said unfortunately Australia continues to pour fuel on the fire by spending billions on fossil fuel subsidies, expanding fossil fuel extraction. He said, “The fossil fuel sector should be made to pay for the damage it is doing.
“A tax on the companies extracting and selling Australia’s fossil fuel resources could be used to set up a National Climate Disaster Fund, which would help the growing number of Australians at risk of losing their homes in a natural disaster.”