Cost of home insurance

Key Takeaways

• Combined buildings and contents insurance costs have risen by 4% since the previous year

• Your premiums can be affected by your property location, size, type and the personal belongings you have inside

• You might save money by combining buildings and contents cover, but always compare to be sure

How much does home insurance cost?

One size won’t fit all with home insurance - the cost can vary depending on a huge range of factors, from the type and size of your home to the contents within.

The Association of British Insurers’ report on home insurance premiums shows that prices went up in the last quarter of 2023 by 4%. It also reported that the average premium for a combined home insurance policy in 2023 was £341, up by 13% from the previous year.

However users that compared combined home insurance through MoneySuperMarket in November 2024 paid an average of £266 per year for combined cover. This demonstrates how important it is to shop around for home insurance to give yourself the best chance of finding a good deal.

This video information is available as a Text Transcript

Why are home insurance premiums increasing?

• A number of different factors contribute towards increase home insurance premiums, including:

• Inflation: as the cost of living climbs, so do the costs associated with repairs and replacements

• Extreme weather: the UK has seen its fair share of weather-related claims, driving up premiums

• Building material costs: with higher prices for materials, the cost of rebuilding and repairs increases

• Claim Frequency: An increase in the number of insurance claims naturally leads to higher premiums, including those from fraudulent activities

What affects the cost of home insurance?

Insurers will factor in a wide range of details and factors to calculate your overall claim risk when setting home insurance premiums - and the specifics will depend on whether they’re insuring your building or the contents within.

What affects the cost of buildings insurance?

Your buildings insurance policy premiums will depend on the following:

• Location: Postcodes that are at a higher risk of flooding, subsidence, burst pipes or theft and burglary can often see higher premiums

• Age and type of property: Older properties or those with unique features may also cost more to insure

• Home floor space: Larger homes generally mean higher rebuild costs so therefore higher premiums

• Rebuild value: Your home’s rebuild value encompasses all potential labour and material costs to rebuild your entire home should the worst happen

What affects the cost of contents insurance?

Your insurer will consider the value of your possessions when setting your contents insurance premiums, as it’s there to protect the movable items within your home - like carpets, appliances and furniture. High value items will need to be declared separately if they’re over your single-item claim limit to ensure you have the right level of cover.

Should I get separate contents and buildings cover?

The decision to split buildings and contents insurance into separate policies is a personal one and depends on your specific circumstances.

For instance, if you own a flat, the buildings cover might already be included in your management charges. It's worth comparing the costs and coverage of combined and separate policies, as sometimes having them apart can be more beneficial.

If you're unsure, you can speak to an insurance broker, who'll show you a breakdown of all your options. A broker can also access offers that you might not be able to see on the market too, so it's worth looking into.

Valuing your home and contents for home insurance

Getting an accurate and realistic valuation of your home and contents is vital for getting the right level of cover on your home insurance policy. Underestimating could leave you without enough protection on your policy when you need to claim, while overestimating means you’ll be paying more than you need to.

How to calculate home contents insurance?

It’s best to take a systematic approach when calculating the coverage amount you’ll need for your contents policy. Take an inventory of each room and list all items and an approximate valuation, and get professional valuations for high-value items to make sure they’re covered.

How to calculate home buildings insurance?

Determining the rebuild value of your home can be done through a professional residential property surveyor or by using tools like the MoneySuperMarket comparison tool, which provides estimates based on the information you provide and BCIS data.

How to get cheaper home insurance?

There are a few things you can think about to try and reduce the cost of your home insurance policy:

• Pay annually: Paying your home insurance premiums in full often works out cheaper than spreading the cost over 12 months, even though there’s a big up front cost

• Volunteer a higher excess: Setting your voluntary excess payment higher indicates you’re less likely to make a claim, so you’ll often get cheaper cover as a result

• Combine home insurance policies: Taking out contents and buildings insurance with the same provider can often be cheaper than covering each separately

• Upgrade your home security: Installing insurance-approved alarms and locks will make your home more secure and reduce the risk of burglary and theft, potentially reducing insurance costs too