Social justice campaigners have called for a universal home insurance scheme to tackle non-insurance and underinsurance.

The Brotherhood of St Laurence says ANZ research in 2011 showed 21% of homeowners do not have building insurance.

And it warns the taxpayer and the wider economy will ultimately bear the cost.

“Notwithstanding… the comparatively small cost of building insurance, one in five owners is prepared to risk considerable financial loss through the absence of coverage,” it says in a submission to the Financial System Inquiry.

“This decision forces government, whether it wishes or not, to act as the insurer of last resort, forcing a significant cost onto taxpayers that could have been mitigated by insurance.

“Without government intervention the problem will remain, exposing homeowners and taxpayers to recurring loss.”

The brotherhood says the family home is most adult Australians’ main source of financial security, so the matter warrants government intervention.

“In view of the community benefit that arises from higher levels of insurance coverage, the Brotherhood believes some form of universal housing insurance is a justifiable objective.”

The organisation says there is a precedent for such intervention, noting public health insurance has been mandated for most of the period since Medibank was launched in 1975.

“This has not… prevented a large private health insurance market from delivering a range of products that augment the universal public scheme. The health insurance model could be adopted in which people who take out home insurance policies are supported by a government rebate.”

The inquiry will present its final report in November.