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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

Quarterly data reveals that average premiums for a combined (buildings and contents) home insurance policy increased by £3.62 in the last year – a rise of 2.58%. The cost of an average combined home insurance policy now stands at £143.73 – that’s up from £113 in 2017, a rise of 27% in three years.

Last updated May 2020 • 8 min read

Home insurance premiums remain high

  • Latest data shows average price of combined buildings and contents insurance stood at £143.73 in the first three months of 2020
  • Premiums have risen compared to a year ago, adding £3.62 to an average policy, although the rate of increase has slowed
  • Buildings-only policies at the start of 2020 cost an average £109 while contents insurance stood at £65

Home insurance premiums in the first quarter of 2020 climbed by 2.58% on the same quarter the previous year. The average price of combined buildings and contents insurance stood at £144 at the start of 2020.

The average price of combined buildings and contents

£144

In Q1 2020

Home insurance premiums have been rising steadily in recent years, but the rate of increase has slowed in 2020.

At the start of 2017, a typical combined buildings and contents policy cost under £115. At the start of 2020, the price was nearly £30 higher – an increase of 27% in just three years.

The good news is that the rate of increase year-on-year appears to be slowing. In 2017 premiums for the typical combined policy rose by 8.5% while in 2018 saw a leap of 14.35%. Moving into 2020 the figure was just 2.58%.

What’s more, the price stabilised across the third and fourth quarters of 2019, and has now been hovering around £144 for the last three quarters actually falling marginally by 75 pence in Q1 2020.

Building and contents as separate policies

Buildings-only policies have seen sharp premium increases, however. Year-on-year, average prices have rocketed by 8.76%, from £100.66 to £109.48. The increase from Q4 to Q1 was £0.99, from £108.49 to £109.48.

Year-on-year, contents-only policies increased by a more sustainable 3% (£1.98) from £62.97 to £64.95, although there has been a 1.86% decrease (£1.23) from Q4 to Q1.

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.

The decline in the rate of price increase in the latter quarters of 2019 does not mean that inflationary pressures have disappeared from the home insurance market. Weather-related claims are responsible for the lion’s share of premium increases, and insurers are expecting the UK’s weather to become more extreme as a result of climate change.

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.

The decline in the rate of price increase in the latter quarters of 2019 does not mean that inflationary pressures have disappeared from the home insurance market. Weather-related claims are responsible for the lion’s share of premium increases, and insurers are expecting the UK’s weather to become more extreme as a result of climate change.

This, they say, will result in more claims which in turn will feed through into higher premiums.

The specific threats associated with the weather include flooding (which triggers claims on both buildings and contents policies), storm damage and subsidence (which both lead to buildings policy claims).

In the first few months of this year there were many instances of severe storms, including Dennis and Ciara, resulting in flooding across areas including south Wales, Herefordshire, Shropshire and Worcestershire. Given that it can take weeks and even months for flooding claims to be resolved, we may see premiums remain high or even increase in 2020 as a result of these incidents.

Those living in the affected areas will see their prices rise by the largest amounts, but the national average is also likely to creep up as insurers seek to balance their books and reflect the increased weather risks we are all deemed to face.

Subsidence is another location-specific risk for homeowners. The problem occurs when the ground shrinks following a prolonged period of drought and a building’s foundations are damaged as a result, causing structural damage to the property. Areas with clay soils are particularly prone.

Dry summers in recent years have resulted in an increase in subsidence claims. As such claims tend to be expensive, often running to several thousand pounds, there is likely to be a continued impact on buildings insurance premiums for those living in affected locations, such as London and the south east of England.

When it comes to contents insurance, burglary continues to be a problem, with thieves increasingly attracted to the high-value, portable gadgets and technology devices that can be found in many homes.

We can expect insurers to continue to promote home security measures in a bid to reduce the incidence of burglary.

Longer term, any impact that the Covid-19 lockdown – such as reductions in burglary rates and greater risk of accidental damage – has on home insurance premiums remains to be seen.

With more people currently spending more time in their home the indication is burglary rates will have decreased. There is also likely to be a reduction in instances of ‘escape of water’ damage as occupants of the property are present and likely to detect leaks before significant damage is caused.

On the flipside, with more occupants at home for longer the rate of accidental damage is likely to increase. In addition to this homeowners and landlords may be faced with the necessity to delay any repairs or put in place temporary fixes as tradespeople and materials are less available. This may lead to further issues and higher costs later down the line.

With premiums still at their highest level in several years, many policyholders will be seeing higher prices when they are invited to renew their cover by their existing insurer.

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

Home insurance premiums over time

 
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.

Average premiums by region

  • London saw the most expensive combined home insurance premiums in Q1 2020 (£204.78)
  • Those in the North East pay the least on average, with combined premiums of £121.77
  • 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 thanks to their clay-based soils, which shrink in times of drought

When you insure your property, the main risks to the building include storm and flood damage, fire and 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 £150.57
  • The cheapest premiums on average apply to those living in a bungalow, at £128.48 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 have a big impact on your risk profile from an insurance company’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 £150.57.

The average premium for a house stood at £146 in Q1 2020, while bungalows saw the lowest premium by property type in the quarter at £128.

The good news for all, 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

£145

Average combined buildings & contents premium for a house
bungalow

£128

Average combined buildings & contents premium for a bungalow
flat

£150

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

£135

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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