What Really Causes Home Insurance Claims? A Look at the Data
By Grace Bedford
As part of our ongoing efforts in reviewing the current market conditions for our Private Clients, we thought it timely to share some insights into what actually drives home insurance claims in Australia and why the answer isn’t always what people expect.
Water damage is the most common claim you’ll never see coming
While storms tend to dominate the headlines, it is water damage that insurers consistently identify as the most frequent non-catastrophe claim: burst pipes, failed flexible hoses, hot water system failures and the like.
It’s a sobering thought that a failed flexible hose costing less than $20 to replace can trigger a claim well in excess of $30,000 once you account for damage to flooring, cabinetry, plasterboard, wiring and the mould remediation that so often follows.
Storms drive the biggest dollar losses
That said, when it comes to total claim costs across the industry, storm damage takes the top spot. Severe weather events generate enormous volumes of claims all at once, and 2025 was a clear example: the Insurance Council of Australia reported roughly 264,000 weather-related claims totalling $3.5 billion in insured losses, with Cyclone Alfred alone responsible for around 132,000 claims and over $1.5 billion in losses.
Fire and flood: rare, but the most expensive per claim
Fire and flood claims occur far less often, but when they do, they tend to be the costliest individual claims by a significant margin; a reminder of why adequate sums insured matter just as much as the likelihood of a claim occurring.
Getting your sum insured right matters more than you think
A policy is only as good as the number sitting behind it. Here’s how to make sure yours holds up when it counts:
Rebuild cost, not market value. What your home would sell for and what it would cost to rebuild are two very different figures. Base your sum insured on rebuilding costs, not real estate estimates.
Revisit it every year, without fail. Construction costs move. Council rates, materials and labour don’t wait for your renewal date to catch up.
Account for demolition and debris removal. Clearing a site after a total loss isn’t free, and it’s often overlooked in the total figure.
Don’t forget the extras. Pools, driveways, fencing, retaining walls, sheds. If it’s on the property, it needs to be in the number.
Renovations change everything. A new kitchen or an added room increases your rebuild cost immediately, not at your next renewal.
Underinsurance is the real risk, not just the claim. Most clients don’t discover they’re underinsured until the moment they can least afford it.
Getting this number right isn’t a box-ticking exercise, it’s the difference between a policy that pays out in full and one that leaves you covering the shortfall yourself.
If you’d like a hand reviewing your sum insured or any other aspect of your private insurance requirements, please get in touch with the Sage team. We’re always happy to help.
Grace Bedford
Private Client Account Management, Sage Insurance
This article is general information only and does not take into account your objectives, financial situation or needs. Please speak with your broker about your specific circumstances.
