And the financial toll is only expected to get worse, with independent analysis indicating it could blow out to $35 billion annually by 2050.
The eye-watering sum was revealed by the Insurance Council of Australia, with worrying implications for higher premiums and the insurability of properties, especially in flood-prone areas.
Five extreme weather events including a cyclone and major hailstorms prompted 294,000 insurance claims in 2025, the council said.
Queensland was the source of the vast bulk of claims, making up a whopping $4.18 billion out of the $4.8 billion national total in insured losses.
It was the largest insured loss damage bill the state had recorded in more than a decade, eclipsing the $3 billion caused by devastating 2022 floods.
NSW incurred the remaining $539 million in 2025 claims.
The year featured north Queensland floods in February, Tropical Cyclone Alfred in March, NSW's mid north coast floods in May and two severe hailstorms in October and November.Â
The estimated cost of flooding and damage from Tropical Cyclone Alfred from February 28 to March 11 was estimated at $1.5 billion and was the source of 133,000 claims.
However, the costliest event was hailstorms in Queensland and NSW in late November, which generated almost 93,000 claims totalling $1.7 billion.
Claims were made for damage varying from dents on car roofs and smashed windscreens to uprooted trees and inundated homes.
The total economic cost of extreme weather events in 2025, including insured losses and broader economic costs, was estimated to be more than $8.6 billion, the council said.
Insured losses from extreme weather stood at $2.35 billion in 2023 and $585 million in 2024 - underscoring the insurance industry's difficulty in forecasting losses from one year to the next.
The council had previously estimated the cost of 2025's extreme weather at $3.5 billion.
Insurance Council of Australia deputy chief Kylie Macfarlane said the toll of extreme weather may only get worse.
"According to independent analysis undertaken for the Insurance Council in 2022, the cost of extreme weather events is projected to grow by five per cent each year and reach a total of at least $35 billion annually by 2050," she told AAP.
"Compounding this, inflationary pressure, particularly in the construction sector, is making it more expensive to rebuild and repair, with costs flowing directly through to insurance premiums."
Ms Macfarlane said extreme weather's unpredictability and intensity demonstrated the urgent need for authorities to invest in mitigation strategies to protect vulnerable communities.
"Keeping insurance affordable and accessible will require governments at all levels to strengthen the resilience of homes, businesses and communities, reform land use planning, and support Australia's transition to net zero," she said in a statement.
Costs were expected to increase further due not just to climate risk but to a volatile geopolitical environment, with supply chain issues caused by the ongoing conflict in the Middle East, the council said.
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