When it comes to general insurance—covering everything from home and contents to cars, travel, and liability—most of us are familiar with the message: don’t get caught without it. And rightly so. Underinsurance is a major issue that leaves individuals and families exposed to financial devastation in the event of a disaster. 

However, is it possible to have too much insurance? Can you be overinsured, and if so, what are the consequences?

The answer is yes—you can be overinsured. Paying for excessive or unnecessary insurance policies may not only drain your finances but also signal inefficiencies in your financial planning. That said, overinsurance is less common than underinsurance, where reports suggest most homeowners are underinsured.

So, how do you strike the right balance? Let’s look at the top signs that you might be carrying too much insurance—and the equally important signs that you might not have enough.

Top 10 Signs You May Have Too Much Insurance

1. Duplicate Cover Across Policies
   If your travel insurance policy covers luggage, and your home contents insurance also covers personal items outside the home, you might be paying twice for the same benefit.
2. Paying High Premiums for Low Risk
   Are you insuring every appliance in your home individually? If the likelihood of claiming is low and the replacement cost is small, you’re probably overspending.
3. You Don’t Understand What You’re Covered For
   If your policies are so numerous or complex that you’ve lost track, chances are you’re insuring more than necessary.
4. Overestimating Asset Values
   Insuring your car for more than its market value or your home contents at inflated estimates can push premiums unnecessarily high.
5. Insuring Rarely Used Items
   Paying for insurance on items or vehicles you seldom use, such as a second car that rarely leaves the garage, may be wasteful.
6. Holding Policies Out of Habit
   Do you keep renewing policies you bought years ago without reviewing them? Your circumstances may have changed—your insurance should too.
7. You’re Struggling with Premium Costs
   If insurance premiums are eating into your budget and affecting your ability to save or invest, it’s time to reassess.
8. High Coverage with Low Risk Profile
   Some people, particularly those without dependents or with significant savings, may not need extensive personal liability or life insurance.
9. Multiple Insurances Through Different Providers
   Without bundling policies, you might miss out on discounts and be paying more than you need to for similar cover.
10. Excessive Optional Add-Ons
    Optional extras like roadside assistance, accidental damage, or hire car cover can add up. If you don’t really need them, they’re costing you.

Top 10 Signs You Are Underinsured

1. You Haven’t Updated Your Policy in Years
   If your last policy update was several years ago, your coverage may not reflect your current needs or asset values.
2. Home Renovations Not Reported
   Updating your kitchen or adding a room can increase your home’s rebuild value—but your insurance won’t know that unless you tell them.
3. Low Contents Insurance Estimate
   Underestimating the value of your possessions can leave you unable to replace them all in the event of a major loss.
4. You Rely Solely on Work Insurance
   Employer-provided income protection or life insurance is often basic and may not be enough if you become seriously ill or injured.
5. No Coverage for Natural Disasters
   Living in bushfire or flood-prone areas without specific cover for those events puts you at huge risk.
6. You Don’t Have Public Liability Insurance
   Whether you’re a landlord or just hosting events at home, lack of liability cover could cost you dearly in a legal dispute.
7. High Excess to Keep Premiums Low
   If your excess is so high that you’d struggle to pay it, your insurance may not be fit for purpose when you need it most.
8. No Travel Insurance for Overseas Trips
   A single overseas medical emergency can cost thousands—travel without insurance is a major red flag.
9. Not Insuring Temporary Assets
   Rental properties, borrowed equipment, or temporary storage items may not be covered under standard policies.
10. Low Income Protection or Disability Cover
    If illness or injury would drastically affect your ability to earn but your policy pays out little or nothing, you’re underinsured.

Striking the Right Balance

General insurance is a critical part of financial wellbeing—but only when it’s tailored to your specific needs. The goal is to be adequately protected without overspending on unnecessary cover. The best way to get there is through regular reviews of your insurance portfolio, ideally with the help of a qualified insurance broker or adviser or financial planner.

Ask yourself: What am I protecting? What would it cost to replace or rebuild? And could I financially recover without this policy? By answering these questions honestly, you’ll avoid the trap of both overinsurance and underinsurance—and ensure peace of mind when life takes an unexpected turn.

If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.

This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.

(Feedsy Exclusive)