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Home insurance costs go through the roof

Patrick Christys
Oct 23, 2019

Is the cost of your home insurance going through the roof?

Home insurance policy costs have increased 25% over the last three years, new research has revealed.

The average combined buildings and contents home insurance policy now costs £144.70 a year, 25 per cent more than 2016 when it stood at £115.80, according to data from MoneySupermarket.

Average premiums have risen by 13 per cent in the last year alone.

The rise has been pinpointed to Britain's now more volatile weather, with insurers concerned climate change will trigger more frequent and violent bouts of extreme weather, the comparison website says. 

Price inflation has been driven by a number of weather-related factors, including an increase in subsidence claims, which affects buildings insurance, following last year's dry summer. 

The cost of home insurance has recently been scrutinised by the Financial Conduct Authority who criticised insurers for charging loyal customers more when they renew their policies than they charge new customers.

The price comparison website compared its own internal data to find out the costs. 

All calculations were based on over six million home insurance quotes from 1 July to 30 September 2019.

Location Average annual combined premium Q2 2019 Average annual combined premium Q3 2019 £ change % change
1.       North West London (NW) £252.40 £268.10 £15.70 6%
2.       South West London (SW) £251.24 £257.06 £5.82 2%
3.       North London (N) £244.10 £253.07 £8.97 4%
4.       West End (W) £246.74 £252.74 £6 2%
5.       Harrow (HA) £238.84 £237.71 -£1.13 -0.50%
Source: Money Super Market       

Those living in the north of the country are paying less than the rest of the UK to insure their home. 

Households in Sunderland and Durham pay the least at £118.97 and £119.22 respectively whilst Newcastle residents pay £121.77 on average.

Claims for flood and storm damage, which can trigger claims for both buildings and contents insurance policies, have also been blamed for the change.   

Insurers are concerned that there will be more floods, storms and associated damage thanks to more volatile weather in Britain, according to MoneySupermarket.  

They are followed by those living in Stoke-on-Trent who pay £122.08 and Carlisle residents who pay £123.20.

Meanwhile, Londoners pay the most with those in North West London paying £268.10 each year – more than twice as much as a Sunderland resident. 

Those living in South West London are paying just under at £257.06 whilst North Londoners are forking out £253.07. 

Rachel adds: 'This could be due to higher burglary rates in affluent areas and higher building and repair costs.

Welsh residents, overall, are paying an average of £129 a year whilst those in Northern Ireland pay significantly more at £171. 

However, those in the Midlands are paying a similar amount with residents in the West Midlands paying £132 whilst those in the East are paying £134.  

Premiums are now substantially higher than a year ago. In the third quarter of 2018, the average premium was £128, meaning there has been a year-on-year increase of £17 - just under 13 per cent.

Buildings-only policies have also seen sharp premium increases with average year on year prices rocketing by almost 19 per cent, from £90 to £106. 

Rachel adds: 'Earlier this month, the FCA ruled that around six million customers are negatively impacted by insurers' dual pricing practices because they automatically renew with the same firm rather than shop around – meaning they're potentially missing out on £1.2billion a year in savings. 

'With some insurance providers reserving their best offers for new customers, it's worthwhile shopping around when renewing to make sure you get the best deal for you.'

To avoid falling victim to the loyalty penalty, customers are advised to use price comparison sites to find if they could save money on a different plan or with an alternative provider.  

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