Home insurance premiums rise 27% in three years - here's why

19 June 2020

Extreme weather and coronavirus drive up the cost of home insurance

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Home insurance premiums have risen by more than a quarter (27%) in the last three years, according to data from MoneySuperMarket.

The average buildings and contents home insurance policy during the first three months of this year cost £143.73, up from £113.30 the same time in 2017.

Residents in London have the most expensive home insurance policies. The average premium for the first three months of 2020 was £204.78, up 6% from £193.80 during the same period last year.

Northern Ireland saw the highest year-on-year increase in cover costs, with premiums rising 11% to £181.87 in the first quarter of this year.

Home insurance is cheapest for homes in the North East, where households pay £121.77, an increase of just 1% compared to the previous year. 

The table below shows how much home insurance costs in different regions across the UK.

Area Ave premium Q1 2019 Ave premium Q1 2020 % Increase
London 193.80 204.78 6%
Northern Ireland 164.12 181.87 11%
East 147.84 152.82 3%
South East 145.90 150.39 3%
Scotland 137.07 140.75 3%
Yorkshire and the Humber 133.97 136.40 2%
East Midlands 131.88 133.91 2%
North West 131.28 133.13 1%
West Midlands 128.78 131.89 2%
South West 126.96 131.20 3%
Wales 125.45 129.06 3%
North East 121.15 121.77 1%

Source: MoneySuperMarket 2020

Why is home insurance more expensive?

In short, more weather-related claims.

UK homes were hit with severe storms during the first few months of 2020, including Brendan, Dennis and Ciara,. This led to flooding and storm damage in areas such as Wales, Herefordshire, Shropshire and Worcestershire.

Dry summers in recent years have also resulted in more claims for subsidence. This is when the foundation of your home collapses or sinks and it often occurs after periods of prolonged drought. Claims for subsidence tend to be very expensive, often running into thousands of pounds.

The coronavirus pandemic has also contributed to the rise in premiums. Although more people have been staying at home, which decreases the chance of burglary, there is an increased risk of accidental damage occurring.

Kate Devine, head of home insurance at MoneySuperMarket, says: “The Covid-19 lockdown will likely have had an impact on home insurance prices this year. In the short term, this may mean that the difficulty in hiring professional tradespeople could heighten the risk of accidental DIY damage and result in higher claims, but also that the lower risk of burglary due to more people staying home could be a factor."

How to get cheap home insurance

The following tips can help you cut the cost of your home insurance premium.

1) Do not auto renew

It rarely pays to be loyal when it comes to insurance. This is because providers reserve the best deals for new customers. If you have been with your home insurer for a while, have a look what other companies are offering. Price comparison websites can help you compare hundreds of deals in minutes. If you find a better deal that gives you the cover you need, switch. You could also use the deals you find as leverage to haggle with your current insurer if you would prefer to stay with them.

2) Read the terms and conditions carefully

It is vital that you know exactly what your policy covers before buying it. Be sure to read the terms and conditions carefully and get clarification of anything that is unclear. Once you have agreed to the terms of a policy, making a claim for things that are expressly excluded will be impossible.

3) Pay annually

Paying annually for home insurance is cheaper than choosing to pay by direct debit. This is because paying monthly is like taking a loan, and some providers charge up to 40% in interest. If you cannot afford to pay it all up front, it is worth trying to get a 0% interest credit card to make the payment. That way you can benefit from a cheaper premium and repay in monthly instalments without incurring interest.

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