$1 insurance deal 'a slap in the face'

While NRMA customers in the Illawarra have seen their policy premiums rise 800 per cent and more, the insurer is offering others the chance of insurance for just a dollar.

Called the "$1 insurance giveaway", the insurer is selling a total of 420 motor and home insurance policies for $1 between now and December 23.

While the promotion started on Monday, a spokesman said it was not in response to the coverage of premium hikes that started last week.

"The $1 campaign has been in development for several months as part of our annual marketing strategy across NSW," the spokesman said.

"It is similar to when we give away vehicles or holidays.

"There is absolutely no connection between the launch of the campaign and the policies mentioned in the Illawarra Mercury."

NRMA Insurance did not believe South Coast residents who had experienced premium price hikes would be angry about seeing others get their homes insured for a dollar, he said.

"We believe people will recognise that the competition is part of a marketing campaign for a limited time."

But that's not how Cath Harding saw it.

The Ivor Street, Bellambi, resident said her NRMA home insurance went from $1092 to $3780 and prompted her to move to GIO.

"It almost feels like a slap in the face," Ms Harding said.

"'Here, you pay us an extra $3000 a year, or $8000 or $6000 a year, but we're going to give someone else from outside the Illawarra who's not at risk a policy for a buck'.

"Essentially, they want me to pay somebody else's insurance as well, do they?"

The premium rise had Ms Harding and her husband fearing they would have to sell the house because they wouldn't be able to afford insurance, a requirement of their mortgage.

"We have three small children, we have a mortgage, we're middle income and I work part-time to pay for school fees and that sort of thing," she said.

"Our budget didn't have any fat in it for us to come up with another $200-odd dollars a month. We just didn't have the money."

Contacting the NRMA, Ms Harding said she was told her house was a flood risk and that she had watercourses on all four sides of her home.

"The way she said it was as though we were living on an island," she said.

"We have a road on one side of my property and we back onto the Northern Distributor.

"I will grant that to the northern side of our property there is a creek but it's 200 metres away, and I don't know where the water source on the southern side of our property is."

While stating Ms Harding's property was at risk, the NRMA spokesman conceded that it was not surrounded by water.

"Ms Harding's property is considered by NRMA Insurance to have a high risk of damage from stormwater runoff," he said.

"This is due to our data showing that in the event of a major storm, the terrain of the area may cause water to damage Ms Harding's home. The consultant who spoke to Ms Harding incorrectly said there were watercourses all around the property. This is not the case.

"Our consultants are trained to take a range of customer queries. Occasionally human error does occur and unfortunately this has happened in Ms Harding's case. We apologise to Ms Harding for any confusion."