Households are facing record premiums for home insurance as the cost of living crisis continues to push up insurance prices.
The rate of inflation may be slowing but that hasn’t fed into insurance bills yet.
Research by Consumer Intelligence has found the average quoted price of home insurance rose by 36.1% in the 12 months to October – the highest annual increase on record.
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It beat the previous all-time high increase of 25.7% set just three months earlier.
The rises come as more extreme weather such as Storm Babet and Ciara have caused more claims for damage to homes and analysts say insurers are recouping the costs of payouts by hiking premiums.
Ernst and Young has also highlighted that insurers have faced supply chains pressures, rising claims and have adjusted premiums now that Financial Conduct Authority rules no longer let them reserve lower rates for new customers.
It is a double blow for drivers as car insurance premiums have also hit a record high.
The average premium paid for private comprehensive motor insurance in the second quarter of 2023 was £511, up 21% annually, according to the Association of British Insurers.
This has been attributed to a 33% rise in vehicle repair costs.
Where are home insurance costs rising?
Consumer Intelligence’s research found the average of the five cheapest quotes for a buildings and contents policy now stands at £227 compared with £163 in October 2022.
Homeowners in London have seen the largest increases, with quoted prices to insure property and contents 36% higher than the UK average.
In comparison, the North East was the least expensive area, with premiums 20% lower than the UK average.
All regions have seen increases in quoted premiums over the past 12 months though, ranging from the North East at 32.1% to the South East at 38.5%, according to Consumer Intelligence.
| Region | Annual increase |
| London | 35.5% |
| South East | 38.5% |
| East | 36.4% |
| Wales | 36.6% |
| Scotland | 35.4% |
| Yorkshire & The Humber | 38.1% |
| South West | 37% |
| West Midlands | 35.1% |
| North West | 34.5% |
| East Midlands | 35.1% |
| North East | 32.1% |
Factors such as age of policyholders and of the property are also a big factor in the rises.
Under-50s households continue to see slightly higher quotes for their home insurance, compared to the over-50s, according to Consumer Intelligence.
Victorian-era properties attract the highest average quoted premiums, according to the research, while the lowest quoted costs are for homes built this century.
Premiums are also rising for those who have previously made claims.
In the 12 months to October, customers claiming for water related damage have seen quoted price rises of 42.8% while those with buildings claims have seen increases of 40.7% and those with damage related claims 39.5%.
In comparison, those with no claims have seen increases of 35.7% and those making theft related claims have experienced increases of 33.9%.
“With Storms Babet and Ciaran causing significant damage to thousands of homes across Britain, we anticipate further increases in premiums over the coming months,” says Laura Vas, senior insight analyst at Consumer Intelligence.
“Homeowners with prior claims may see additional increases in coming months following recent storm damage, although insurers could spread the claim costs across all policy holders driving further market inflation.”
How to cut home insurance costs
You can't predict weather events or what your insurer will charge but there are some steps you can take to reduce your home insurance costs.
Paying annually rather than monthly is typically 18% cheaper, according to Go.Compare, while having extra security may reduce your premiums.
Combining your home and contents cover may also work out cheaper and also check if you can get favourable rates through your current account provider.
Another option is to increase the excess you are willing to pay if you make a claim. This will lower your premium but does mean sorting out an issue will cost you more.
Also check your policy to see if you are paying for extras that you don't need or use such as boiler or gadget cover that you could find cheaper elsewhere.
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