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Home insurance cost soars 19% - but £560m storm payout shows ‘importance of cover’

The cost of buildings and contents home insurance rose 19% last year as bad weather battered the UK.

The average price paid for home insurance between October 1 and December 31 2023 was £364, compared with £305 the same time the year before, according to the Association of British Insurers (ABI).

The £59 price rise comes after £352 million was paid out to 36,000 customers who suffered property damage in Storms Babet, Ciaran and Debi.

The full amount of storm claims will not be known for some months as assessments are still being made, but the ABI estimates a total of £560m will be paid out by insurers.

There has also been a surge in homeowners claiming for burst pipes due to the cold weather at the end of last year and start of this year.

Insurers are also battling against rising costs of building materials and labour.

ABI analysis, which looks at the amount paid - rather than quoted - for 16 million policies, found the average price was up 4% in just three months. Looking at the whole of 2023, the average home insurance premium rose 13% to £341.

NimbleFins research into the average cost of home insurance found the five cheapest quotes came out at £377 on average for early 2024, but that some quotes were 5-6X the price of other quotes.

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Erin Yurday, CEO and founder of NimbleFins said: “Our research, which looks at the five cheapest quotes rather than the whole market, shows premiums vary wildly and comparing quotes could save you a lot of money.

"You might pay more or less in the market today depending on the rebuild cost of your home, the excess, your no claims bonus, the features you want in a policy and even if you have made a claim on your home insurance in the past."

Meanwhile, the ABI found buildings insurance on its own rose 15% year on year, up to £262.

Contents insurance has also risen, but by a smaller 7% to an average of £124 over 2023.

Some good news

Although the cost of home insurance has risen this year, it doesn't look as bad when the price is adjusted for inflation.

In fact, according to the ABI, when the price is adjusted for inflation the average price of cover has actually fallen between 2014 and 2023.

That means although prices have risen, you were paying more in real terms in 2021 and earlier.

Louise Clark, ABI’s policy adviser for general insurance said: “The succession of storms that have battered the UK in recent months underlines the importance of home insurance, with insurers supporting thousands of customers whose homes and possessions have been damaged or destroyed.

"Despite rising cost pressures, insurers are totally committed to doing everything they can to continue to offer competitively priced home insurance.”

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Helen Barnett

Helen is a journalist, editor and copywriter with 15 years' experience writing across print and digital publications. She previously edited the Daily Express website and has won awards as a reporter. Read more here.