Cost of home insurance soars more than a third in two years
The average home insurance policy covering both buildings and contents cost £407 in the third quarter of 2024 - up £107 (36%) compared to 2022 when prices were £300 on average.
Meanwhile separate buildings insurance cost £329 in Q3 2024, up £101 (44%) since 2022 when prices were £228.
Policies covering solely contents cost £116 in 2022 but rose 19% (£22) to £138 in Q3 2024.
The data from the Association of British Insurers (ABI) correlates with separate research by NimbleFins, which found buildings and content cover (which included accidental damage, legal and home emergency additions) costing on average £489 a year.
NimbleFins also found basic home insurance, not including accidental damage and other additions, for £377 on average.
Insurers paid out a record £4.1 billion in the first nine months of 2024, the ABI said.
Providers were hit with claims for £1.3bn in claims during the third quarter of 2024, following another £1.4bn in Q2, and £1.4bn in Q1.
The first nine months of 2024 were £500m more expensive than the same period in 2023.
Claims for damage to homes from storms, heavy rain and frozen pipes reached £136 million in the third quarter of 2024.
Meanwhile £66m was paid out for subsidence claims between July and September - a 61% increase year on year.
Although home insurance costs have surged in the last two years, they were at record lows in 2022.
Back then, providers warned the summer heatwave may cause a surge in subsidence claims causing prices to rise again, and claims figures show this to be the case.
The rising cost of labour and parts has also seen insurers sound a word of caution.
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Louise Clark, policy adviser at the ABI said in November 2024: "We know premiums are putting pressure on household budgets and, as an industry we’re determined to play our part in tackling the cost pressures behind them.
“However, the industry cannot do this alone. The Government must take action too, and more investment in flood defence and maintenance is urgently needed.
"We also need to see swift action on surface water flooding, and an immediate end to building on land that is at a high risk of flooding.
"Flood prevention and resilience measures must be considered in all planning decisions and building standards – to make sure all new buildings are climate resilient.”
Homes with a lower rebuild cost are cheaper to insure. When NimbleFins compared the same type of house with different rebuild estimates, it found the average cost of home insurance to be as low as £361 for a comprehensive policy with a £120,000 rebuild cost, compared to £509 if it was estimated to cost £1,000,000 to rebuild the property.
NimbleFins previously reported nearly one in four home insurance claims are rejected , with experts suggesting some people do not know what they are signing up for.
While some insurers were found to accept 95-100% of claims, the worst providers were found to pay out on just 55-60%, the Financial Conduct Authority found.
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