The average cost of home insurance premiums rose by 3% in July to September, according to the latest data from the Association of British Insurers (ABI).
Record claims have been blamed for pushing prices up, with £1.3bn paid out by insurers during the third quarter of this year.
Here, Which? takes a closer look at the price of home insurance, why costs are rising, and how to pay less for your premium.
What’s happening to home insurance prices?
The ABI’s latest report shows the average price for a combined buildings and contents policy rose to £407 in July to September 2024, from £396 in the second three months of the year.
Compared to the same period in 2023, premiums have increased by 16%.
The average cost of taking out a buildings-only policy also jumped by 3% between the second and third quarters of this year. Contents-only prices remained stable, however.
When adjusted for inflation, home insurance premiums are comparable with prices paid in 2017, when the ABI started collecting this data.
Released every three months, the ABI’s data gives the most accurate picture of the market as it’s based on prices consumers are actually paying, rather than quotes, and combines both renewals and new policies.
This chart shows how the average cost of a home insurance premium has risen since January 2022:
Why is the cost of home insurance so high?
The latest ABI figures show insurers paid out £1.3bn in claims during July to September 2024. That’s £200m more than in the same quarter last year.
This brings the total amount paid out in the year so far to £4.1bn – the largest amount paid out in the first nine months of any year on record.
Bad weather continues to be the main driver behind the increase in claims pay-outs. Claims for damage to homes from storms, heavy rain and frozen pipes reached £136m in the third quarter of 2024. This is the sixth consecutive quarter that weather-related claims have been above £100m. The figure is also 6% higher than the £128m paid out last July to September.
Last year, the quick succession of storms Babet, Ciaran and Debi between October and November caused £352m of damage to homes and led to a surge in weather-related claims in 2023, worth a total of £573m. This was the most on record and damage caused by flooding made up the lion’s share of claims.
Subsidence pay-outs for home insurance claims also increased by 11% in the third quarter of this year. They rose in value to £66m, up from £59m paid in April to June 2024.
- Find out more: does home insurance cover flooding?
Ways to save on home insurance
The cost of home insurance may be rising, but there are several ways to mitigate any premium price hike:
1. Shop around
This should always be your starting point. But with so much choice, choosing an insurer can be hard.
Price comparison sites that allow you to view multiple quotes at a glance are a good place to start. The main ones for insurance are Compare the Market, Confused.com, GoCompare and MoneySuperMarket.
To get a clearer idea of how different home insurance policies compare, you could also take a look at our guides on the best contents insurance and buildings insurance. We’ve rated policies from dozens of insurers to help you choose the right cover.
But remember, not all providers are on there. Which? Recommended Providers Direct Line and NFU Mutual are examples of this.
2. Don’t automatically renew
Never agree to the auto-renewal clause included in your 12-month home insurance agreement. This means that once your initial one-year contract lapses, you will be automatically enrolled for another year.
Instead, use the best quotes you’ve gathered to negotiate with your insurer and take your new business elsewhere if it doesn’t improve its offer.
3. Renew early
If you leave arranging home insurance until the last minute, generally speaking, insurers are likely to charge you more than if you bought the cover a few weeks in advance of the cover starting.
Try buying your insurance weeks (rather than days) ahead of the policy going live.
4. Pay annually
Paying by the month for your cover can make it more manageable within your budget, but it is usually the most expensive option overall.
When paying monthly, you’re effectively borrowing the year’s premium to repay in instalments. This typically comes with interest, hiking the overall cost.
5. Cheaper isn’t always better
Opting for the very cheapest policy you find won’t necessarily save you money in the long run.
If your policy comes with steep excesses or significant exclusions, you’ll feel the pinch when it’s time to claim. This means it’s vital you check the policy details carefully before buying the cover.
- Find out more: how to find cheap home insurance
This article is regularly updated with the latest figures from the ABI and other home insurance indices.
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