According to the latest Consumer Intelligence Price Index, the average home insurance price quoted to customers rose by around 40% in between 2022 and 2023.
In this post we will outline some of the underlying causes of these home insurance price rises and provide some tips on how you might reduce the price of your home insurance premiums.
Are you looking to save money on home insurance? We can help you ensure you get the cover you need at the best possible price. For more information, call us on 0208 290 9093 or email shuaib.rahman@anthonyjones.com
Why Is Home Insurance Going Up This Year?
The latest Association of British Insurers ( ABI) data shows the second quarter of 2024 saw the average price of home insurance rise to £396, up £21 (6%) on the previous quarter. The average buildings only policy was £321, an increase of £23 (7%) from the previous quarter. For contents-only cover, the average price paid was £137 – £5 (4%) higher than Q1 2024.
Looking at the longer-term picture, the average premium for a combined policy increased 19% compared to the same period in 2023.
So why are home insurance premiums rising? For several reasons:
- Rising Costs. The amount you pay for your home insurance is partially based on your home’s rebuild cost – that is, the amount it would cost to rebuild your home if it were destroyed. Due to rises in the costs of both building materials and labour, the average home insurance claim has risen. Higher premiums are one method for insurers to manage these higher claim payments.
- Extreme Weather. Over the past few years, the UK has been hit by increased frequency of storms, along with numerous flooding incidents. This means that there have been multiple insurance claims for weather-related events, increasing the amount that insurers have paid out in claims.
- Claims Inflation. There tends to be thin margins on household insurance, and the majority of insurers failed to price accurately for the levels of inflation.
- Market Unrest. The home insurance market was marginally unprofitable in 2023. As a result of this, some insurers have chosen to leave the market. This has left less competition in the market.
- Insurance Premium Tax. The Treasury adds 12% tax to all Household premiums and 12% of a bigger premium is a bigger number. This tax is nothing to do with insurers or brokers who are merely collecting the tax on behalf of the Government.
When Will The Price of Home Insurance Come Down?
The bad news is that the price of home insurance is likely to continue rising for the foreseeable future. The better news is that major insurers are reporting that the rate of increase is slowing The volatility of weather related incidents will be a major factor in market stability as will the cost of claims and any additional capacity returning to the market.
How To Save Money on Your Home Insurance
There are a few things you can try that might help bring down the price of your home insurance premiums.
Get Your House Rebuild Cost Valued
As we mentioned above, home insurance premiums are largely based on your home’s rebuild costs. If you can provide your insurers with an up to date rebuild cost, one that accurately reflects the current market, it might help reduce your home insurance premiums. You can do this yourself via the BCIS calculator.
How to Get a Better Deal When You Renew
If your home insurance is up for renewal, don’t just rely on the auto-renewal process. Instead, shop around for the best deal. If you can find a cheaper policy, call your insurers and let them know. They may agree to match the competitor’s price, or even beat it.
Ways to Pay Your Home Insurance to Save Money
If you can afford it, you can often make a saving on your home insurance if you pay annually, rather than monthly.
You can also offer to pay a higher excess to bring down your premium payments. But take care when doing so. Set your excess too high and you could find yourself in trouble if you ever need to make a claim on your policy.
Talk to an Insurance Broker
When times are tough, there are many benefits to working with an insurance broker.
Talk to us, and we will take the time to understand your home insurance needs. We will then work to find you an insurance package that gives you all the cover you need at the best possible price.
If you are unable to pay your home insurance in full, we have suitable premium finance options available to us.
For more information, call us on 0208 290 9093 or email shuaib.rahman@anthonyjones.com
