Home insurance cost soars 28% in four years - but £1.2bn weather payout shows 'vital role of insurance'
According to the latest data from the Association of British Insurers (ABI), the average price homeowners paid for a combined buildings and contents home insurance policy in Q3 2025 was £384.
While prices are falling, the current £384 average is still significantly higher than the £299 we saw at the end of 2021, meaning insurance is still roughly 28% more expensive than it was four years ago.
While this remains significantly higher than 2022 levels, it represents a slight cooling of the market, falling from a peak of £407 recorded in Q3 2024.
These pricing shifts follow a period of unprecedented claims activity. Insurers paid out a record £6.1 billion in 2025 as extreme weather events became more frequent. Across the year, £1.2 billion was paid out for weather damage to properties - a 14% rise year on year, despite 2024 also seeing a previous record-breaking year, the ABI said.
In its 2026 report, the ABI said that while storms and flooding played a significant part in increased payouts, hot weather caused a surge in subsidence claims.
Insurers are also battling against rising costs of building materials and labour. The industry is struggling with a severe shortage of skilled tradespeople and the increased cost of 'green' building materials required to meet updated 2026 building regulations. These factors are keeping the average cost of home repairs significantly higher than pre-2024 levels.
ABI analysis, which tracks the actual amount paid for 16 million policies - rather than the amount quoted - shows premiums reached a historic peak in 2024 due to rising building material costs and extreme weather claims. However, by late 2025, the market began to slightly soften. While the 2024 average rose sharply, the 2025 data shows a stabilisation as insurers adjusted their risk models to account for the previous year’s record payouts.
NimbleFins research into the average cost of home insurance found the five cheapest quotes for a typical British home with a £300,000 rebuild cost and without accidental damage cover, now average around £356 a year. But quotes can vary massively and we found some high-end quotes can still be 5-6 times more expensive than the most competitive deals on the market.
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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."
Standalone policies have followed a similar trend. ABI tracking shows that buildings insurance on its own has decreased from its 2024 peak to an average of £315 in Q3 2025, while contents insurance policies fell slightly to £132 during the same period. While rates have begun to plateau, they remain well above historical levels as insurers continue to battle the high costs of building materials and the increased frequency of extreme weather claims across the UK.
Some good news
While home insurance premiums rose sharply throughout 2024 and 2025, the ABI historically pointed out that, until recently, the cost of cover had actually fallen in real terms. Between 2014 and late 2023, the inflation-adjusted price of a combined policy dropped by roughly 10%.
However, the record-breaking 19% price hike in 2024 — driven by weather-related claims hitting £4.1 billion — has significantly narrowed that 'real terms' saving, with 2026 premiums now sitting at their highest levels in over a decade, even when accounting for inflation.
Chris Bose, director of Ggneral insurance policy at the ABI, said: “Once again, we’re seeing the toll that increasingly severe weather is taking on homes and businesses across the UK. A record £6.1 billion in property claims last year shows both the scale of the damage and the vital role insurers play in helping people recover.
“Government action is essential to protect communities from the growing impact of extreme weather. This includes stronger planning rules to stop building in high‑risk flood areas and designing homes with resilience in mind.”
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