Home insurance premiums rise as insurers pass on weather claims and repair costs

The price of home insurance premiums is rising as insurers grapple with a spike in claims and rising repair costs.

In the course of 2022, these premiums fell to the lowest level ever, due to competition and a legal ban on making old customers pay more than new ones.

But now the cost of home insurance is rising again. The average premium for a combined home and contents policy was £315 in the first three months of 2023, up 6 per cent from the same period in 2022.

The average buildings-only policy cost £236 in the first quarter of this year, a 5 per cent increase from 2022, according to the Association of British Insurers industry body.

For the contents, cover the average price of £117 is a 1 per cent increase.

These premiums are going up because of an increase in weather damage insurance claims last year.

The severe storms of February 2022 resulted in insurers handling 170,000 property damage claims and paying out £473 million in claims so far.

That was followed by last summer’s record-breaking heat wave, which caused a significant increase in subsidence.

iInsurers expect to pay £219 million for subsidence claims made in 2022.

The December 2022 cold snap caused a wave of frozen pipes, causing water to leak as pipes burst.

Meanwhile, the rising cost of repairing damaged homes is also being paid for by consumers in the form of higher premiums.

The ABI said cconstruction costs increased by 15 percent in 2022.

Reasons for this increase include the war in Ukraine, which led to a sharp increase in energy prices, and a shortage of raw materials due to factory closures during Covid-19 lockdowns.

ABI general insurance manager Laura Hughes said: ‘Insurers recognize that these remain difficult times for many households dealing with the rising cost of living.

‘The increase in the average building and contents premium over the past year remains below inflation, despite the above-mentioned inflation increases in the costs of many building materials.

“In these challenging times, anyone concerned about being able to continue paying their home insurance should talk to their insurer about any alternative payment options.”

How to save money on your home contents insurance

Consider switching, not renewing

Financial regulations mean that your current insurer can’t charge you more than a new customer for the same cover – but that doesn’t mean your current insurer is offering the best deal possible.

It may be worth trying a number of different comparison sites to cover all bases, as well as going straight to insurers.

Some insurers, such as Aviva and Direct Line, do not list their prices on comparison websites.

Reduce your risk – and your premium

When it comes to lowering your insurance premiums, there are several steps you can take. First of all, it is wise to check the insured amount on your home insurance policy. It could be well above the actual cost of rebuilding your home if the worst happened, and you could lower it and save money.

However, you should never skimp on this or artificially lower it, as you may be breaking your mortgage terms and will be underinsured in the event of a disaster.

Likewise, it is a mistake to underestimate the value of your content, as you will suffer a loss in the event of theft, loss or damage.

It is possible to reduce the costs of your home contents insurance by lowering your risk.

Participating in Neighborhood Prevention, installing better locks, having a burglar alarm installed or having better smoke detectors installed can all lead to lower insurance premiums.

You can also often get discounts of around five percent for a smoke detector, burglar alarm or deadbolt locks.

Some companies offer to cut customers’ premiums by as much as 15 or 20 percent if they install a sophisticated sprinkler system and a fire and burglar alarm that alerts the police, fire department, or other emergency rooms, but these can often be expensive up front.

Take advantage of no claims discount

Many of us are familiar with the concept of the no claims discount from our car insurance. This is where a history of not filing a claim can lower your premium.

This is also a growing feature of home insurance. Typically, households are asked if they have made a claim in the past during a certain period of time, and if they have not, they may receive a lower premium.

However, some insurers are now also making no-claim offers in the form of discounts that take this idea a step further.

This means that if you don’t file a claim, your premiums may be frozen when it comes time to renew. It’s an option worth exploring.

Cheaper is not always better

When looking for home insurance, it’s vital to remember that while you want to keep costs down, you also need the best possible coverage.

Insurance contracts vary not only in price, but also in terms of what is and what is not covered.

Any number of home disasters could potentially befall you, and you could end up with thousands of dollars out of pocket if you skimp on insurance.

When choosing an insurance policy, it is always best to consider the worst case scenario. A little extra in premiums will cost much less than a very expensive bill for your buildings or contents that isn’t properly covered.

Always make sure you read the fine print and exclusions on policies and compare equal against equal.

It is also wise to take a good look at the extras that an insurer offers you, such as useful extra services or the possibility to keep the premium low in the future.

When you receive policy documents, read them carefully and make sure all details are correct and everything you need is covered. Then at least you’ll be prepared if the worst happens.