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Home insurance UK price index

See how much home insurance costs in the UK, based on more than seven years of data and millions of customer quotes

Latest quarterly data reveals that average premiums for a home insurance policy (combined buildings and contents) increased by 3.68% over the last year – the equivalent of just over £5. This puts the average cost of a combined home insurance policy at £146 – up from £115 (a rise of 27%) in the three years since 2017.

Last updated July 2020 • 8 min read

Home insurance premiums continue to climb

  • Latest data shows average price of combined buildings and contents insurance stood at £146.04 in the second quarter of 2020 (April, May, June)
  • Premiums have risen compared to a year ago, adding £5.18 to an average policy
  • Buildings-only policies cost an average £113 while contents insurance stood at £66

Home insurance premiums in the second quarter of 2020 – April, May and June – climbed by 3.68% compared to the same quarter the previous year. The average price of combined buildings and contents insurance now stands at £146 having increased for the last three consecutive years. Premiums for home insurance are the highest level recorded since 2013.

The average price of combined buildings and contents

£146

In Q2 2020

Home insurance premiums have hit their highest point since 2013, having risen steadily in the last few years.

At the start of 2017, the typical cost of an annual combined buildings and contents policy sat at under £115. As we reach the halfway point of 2020, this has risen by £31– an increase of 27% in just three years.

While the rate of increase year-on-year appears to be slowing, premiums for home insurance are still going up and show little sign of abating in the short term.

Building and contents as separate policies

Buildings-only policies continue to see sharp premium increases. Year-on-year, average prices have rocketed by 11%, from £101.89 to £112.59. The increase from Q1 to Q2 was £3.11, from £109.48.

Year-on-year, contents-only policies increased by nearly 6% (£3.61) from £62.88 to £66.49, whilst a 2.37% increase (£1.54) was recorded from Q1 to Q2.

Combined policies often do not reflect the increase in separate buildings and contents policies because insurers often provide a premium discount to customers who buy both elements together.

Why the Q2 premium rises?

There are several possible drivers behind the 2.31% increase in home insurance premiums recorded during Q2 of 2020.

Covid-19 lockdown – which ran from 23 March until restrictions started to ease in June – may have played a part. With many people remaining constantly at home – schooling, working and even exercising – the rate of accidental damage becomes significantly higher, and more claims spell higher costs for insurers.

Homeowners and landlords could have also been forced to delay necessary repairs or put temporary fixes in place, as tradespeople and materials were less available, also leading to higher claim numbers.

On the flipside however, lockdown likely meant fewer house burglaries and a reduction in common ‘escape of water’ claims (with people at home to detect it before serious damage is caused). This could suggest home insurers received fewer claims during lockdown.

It should also be noted that accidental damage is often a bolt-on to standard home insurance policies which many policyholders may not have.

A rise in weather-related claims may have also applied slight upward pressure on premiums in the second quarter. The early part of 2020 was witness to several storms, including Dennis and Ciara, resulting in flooding across areas including south Wales, Herefordshire, Shropshire and Worcestershire.

Finally, at a fairly nominal premium increase of 2.31% during Q2, simple inflationary pressures on the home insurance market may have also played a part.

Home insurance premiums over time

 
home insurance
The nation has arguably never spent more time at home as during the Covid-19 lockdown. And while this increases the risk of accidental damage, it also significantly reduces the chance of burglary. The longer-term impact of these contrasting factors on home insurance premiums remains to be seen.
Couple in kitchen
Insurers tend to reserve their best prices for new customers, which is why it’s always worth shopping around at renewal.

What about movement in premiums over the next year?

The next 12 months presents an interesting landscape for movement in home insurance premiums – with potential triggers for both rises and falls.

Home insurers will need to keep some financial reserves following orders on 18 May from industry regulator the Financial Conduct Authority (FCA) to provide assistance for their customers struggling to make home insurance payments due to coronavirus.

While not in every case, financial help could take the form of payment deferrals of up to three months. Applications for deferrals are open until at least 18 August and, under proposals announced by the FCA on 24 July, will almost certainly be extended beyond this date. Insurers could begin to pass this cost onto their customers in higher premiums.

Equally however, a potential forthcoming rise in demand for home insurance could fuel competition among providers to offer the best deals – putting downward pressure on premiums.

The government’s stamp duty break on property worth up to £500,000 is likely to see a spike in home moves between now and 31 March 2021 – the deadline for in the incentive. And any increase in the volume of people moving has a direct impact on demand for new home insurance policies, whether combined or buildings insurance-only in the case of buy-to-let landlords.

The full impact of this year’s flooding also remains to be seen, as claims of this nature can take often take months to be resolved.

What about in the longer term?

Factors affecting home insurance premiums in the longer-term however, tend to suggest rises are in store.

Subsidence in some areas of the UK due to the warmer weather and the growing number of high-value portable gadgets which are easy picking for burglars, is also likely to put upward pressure on home insurance premiums.

And even with costs now at their highest level in several years, many policyholders will be seeing higher prices still when they are invited to renew their cover by their existing insurer.

The best way to avoid this is to shop around every year and take advantage of the lower prices on offer through MoneySuperMarket.

Home insurance premiums over time

 
“Premium rises of 2.31% recorded over Q2 of 2020 – perhaps explained by Covid-19 lockdown or bad weather at the start of the year – may not feel too painful. But the figures mark a more significant rise of 3.68% compared to 12 months ago, and 27% compared to three years ago.

“And with the longer-term outlook for home insurance premiums potentially one of more rises, it’s crucial for consumers to take matters into their own hands and shop around for the cheapest home insurance premium at every renewal.”

Average premiums by region

  • London saw the most expensive combined home insurance premiums in Q2 2020 at £211.19
  • Those in the North East pay the least on average, with combined premiums of £121.99
  • Burglary is more of a problem in urban areas, which is one reason why London has higher premiums than other parts of the UK. Parts of south-east England, including London, are also particularly prone to subsidence

Bigger towns and cities tend to have higher crime rates, which can contribute to higher costs.

Region is a major factor when it comes to calculating the cost of home insurance premiums.

Insurers set prices according to the likelihood of claims as a result of fire, flood and subsidence and burglary using the number of related incidents in any given postcode.

Insurers are also concerned that climate change will trigger more frequent and more violent bouts of extreme weather, leading to floods, storms and associated damage. Any reductions in rainfall over the long term may also lead to an increased number of subsidence claims.

As far as belongings are concerned, the biggest perceived risk on a day-to-day basis is burglary. This is more of a problem in urban regions, which is one reason behind why premiums are higher in London compared to other parts of the UK.

 
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How property type affects home insurance costs

  • Those who live in a flat or apartment pay the highest premiums on average* for combined buildings and contents insurance, at £150.30
  • The cheapest premiums on average apply to those living in a bungalow, at £129.23 for buildings and contents insurance
  • 74% of people who live in a flat or apartment enquired for contents insurance only. Buildings insurance in such circumstances is often the responsibility of the leaseholder or landlord

The type of property you live in can also have a major impact on your risk profile from an insurer’s perspective.

Properties with shared access can be more susceptible to break-ins, for example, while homes that are attached to each other, such as terraced houses and properties subdivided into flats, can be more at risk of damage by spread of fire or leaked water.

Those living in flats and apartments with shared access typically pay higher premiums for combined insurance (buildings and contents), at an average of £150.30.

The average premium for a house stood at £148 in Q2 2020, while bungalows saw the lowest premium by property type in the quarter at £129.

The good news is across the board however is that you can usually save money on your premiums if you shop around at renewal.

*excluding ‘other’ properties such as bedsits and halls of residence for which there is low volume

house

£148

Average combined buildings & contents premium for a house
bungalow

£129

Average combined buildings & contents premium for a bungalow
flat

£150

Average combined buildings & contents premium for a flat/apartment
townhouse

£138

Average combined buildings & contents premium for a town house

All premium price data is based on the median cheapest on screen price for the given period that customers see when running a quote. Premiums are therefore based on MoneySuperMarket customers only and are representative of the UK average.

From October (Q4) 2018 onwards the on screen price also includes add-ons in line with IDD, as such it may not be accurate to compare figures pre and post this date.

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