Home insurance price index: How much does home insurance cost?

Data from Go.Compare shows average combined buildings and contents premiums have risen for a fourth consecutive quarter.

This is likely due to rising inflation and rising cost of materials and labour.

The average cost of a combined home insurance policy is £162 – up 8% from Q1 2022 when costs were £150.^[1]

Are price rises affecting buildings-only and contents-only policies?

Yes. Contents-only premiums have also risen year-on-year, increasing by 1.7%, from £56 to £57.

Buildings-only policies saw the biggest increase. Year-on-year, average prices have risen by 12%, from £116 to £130.

Buying two individual policies is generally more expensive than buying combined buildings and contents cover. Insurers will usually apply a discount for purchasing the two together.

Why have home insurance premiums gone up?

One reason could be the more extreme weather experienced in the UK recently. Our homes aren’t built to withstand extremes of hot and cold. So cracks form more frequently, subsidence and heave cause instability, leaks are more common and weather damage claims are more frequent.

The pandemic kickstarted a surge of inflation, which means the cost of pretty much everything has gone up. This affects material and labour costs, so it’s no wonder insurers are putting their prices up – to make sure they aren’t left out of pocket should you claim.

Our insurance expert Ryan Fulthorpe had this to say:

“2023 has seen price hikes across, food, fuel, restaurants and hotels through inflation, home insurance also has seen average price rises. This again is due in part to inflationary reasons but insurers also have seen a rise in claims for incidents like subsidence and frozen pipes.”

“With the rising cost of materials, labour and the influx of claims, insurers are passing that cost on when you renew or first take out insurance and that is why we are seeing prices rise for home insurance. This is why it is always important to shop around to make sure you are getting the best product and price for your circumstances.”

Will premiums go up in future?

“It’s difficult to say whether prices will go up further in future,” Ryan admits. “With inflation slowly creeping down you would hope that would have a beneficial impact on the costs insurers have, although it is dependent on the year they have for claims and what costs they would've incurred.”

Factors that impact the cost of home insurance

There are four main factors that can affect the cost of home insurance:

Age

Insurers tend to see older homeowners as less of a risk because:

• Statistically they make less claims or for smaller amounts
• They have become more security conscious
• They might be at home more often so less of a target for burglars
• They are likely to be financially secure and on top of home maintenance

All of this can add up to lower prices.

Property type

The cost of your home insurance is also influenced by the type of property you live in. Whether that's a house, flat or bungalow.

*The average median cost of combined buildings and contents insurance policies by property type purchased through Gocompare from 1 Jan 2023 to 31 March 2023.

Flats cost the most to insure on average, at £171. This is likely because of the impact of high-rise apartments with cladding being more costly to insure.

Insurers generally look at things like the rebuild cost or total value of your possessions. But also the potential risk you pose to the insurer.

If your property is at greater risk of fire damage, flooding or if you have previous claims, these can all affect how much you end up paying.

Size of property

The average cost of home insurance usually increases as the number of bedrooms go up. This is because the rebuild value of the property increases as the size does.

Our research shows that the average cost of a combined buildings and contents insurance policy for a two-bedroom home is £138.

The average cost of a combined home insurance policy for a three-bedroom home is £163 and the average cost for a four-bedroom home is £227 a year.

But, you may find your premium is more or less than this, depending on where your home is, the age of your house and what type of property you live in.

*The average median cost of combined buildings and contents insurance policies by number of bedrooms purchased through Gocompare from 1 Jan 2023 to 31 March 2023.

A one bedroom property costs £134 on average to insure, but that goes up to £210 for a four bedroom home, a 56% increase.

Monthly vs. annual payments

It’s more expensive to pay for your home insurance in monthly instalments because interest will be added on top of this.

The average cost of a combined home insurance policy paid monthly is £192 a year. This is around 18% more expensive than a one-off annual payment policy at £162 a year.

Location

Your postcode matters because some places are at higher risk of claims from things like crime or floods, or have more expensive property prices.

*The average cost of combined buildings and contents insurance policies by region purchased through Gocompare from 1 Jan 2023 to 31 March 2023.

It means that some parts of the country are much more expensive for home insurance.

Northern Ireland is the most expensive in the UK at £270 per year.

Unsurprisingly London is the most expensive in England at £248 for buildings and contents insurance. The North East is cheapest at £142.

How to get cheaper home insurance

You must always answer questions honestly when you’re getting home insurance quotes, but there are a few things you can do to help cut the cost:

• Pay annually – paying monthly costs more overall as you’ll be charged interest.
• Buy a combined home and contents policy rather than two separate policies from two providers - it usually works out cheaper.
• Pay for the right level of cover – don’t take out a policy that offers you more value for your contents than you need and estimate your rebuild cost accurately.
• Don’t take out add-ons you don’t need.
• Improve your home security with smoke alarms, burglar alarms and secure locks.
• Keep your home well maintained - there’ll be less chance of making a claim which will protect any no claims discount you have.