Cost of home insurance plunges to lowest level but warning issued for later this year

The average home insurance policy covering both buildings and contents cost £300 in 2022, new figures show. Meanwhile separate buildings insurance cost £228 and policies covering solely contents cost £116, both also at an all-time low.

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 £294.

NimbleFins also found basic home insurance, not including accidental damage and other additions, for £240 on average.

The premiums – the lowest since the ABI started collecting data in 2012 - are despite storms Dudley, Eunice and Franklin causing 170,000 claims for property damage in February, costing insurers £473 million.

However insurance companies fear the summer heatwave may cause a surge in subsidence claims in 2023 meaning prices start to rise again. The cold weather in December also triggered a wave of claims for burst frozen pipes which could have a knock-on effect on premiums this year. The rising cost of labour and parts has also seen insurers sound a word of caution.

Laura Hughes, ABI's general insurance manager, said: "Despite the amounts paid out last year, and a rise in the costs of building materials and labour, home insurers will continue to do all they can to offer competitive deals to customers.

“Insurers appreciate that these continue to be tough times for many households coping with the rising cost of living. Anyone concerned about being able to continue paying their home insurance premium should speak to their insurer about any alternative payment options that may be available.”

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 £276 for a comprehensive policy with a £120,000 rebuild cost, compared to £364 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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