Average price paid for home insurance ‘at lowest levels in at least a decade’

The average price paid for home insurance has fallen to its lowest levels in at least a decade, though a rise in subsidence claims and frozen pipe payouts could put pressure on premiums in 2023.

While many other household bills were surging, the average cost of home insurance in 2022 was £300 – down by 6% compared with 2021 and the least expensive amount since the Association of British Insurers (ABI) started collecting the data in 2012.

The average prices paid for separate buildings (£228) and contents policies (£116) were also the lowest on the ABI’s records.

The ABI said the home insurance market remained very competitive, despite many homes experiencing weather-related damage last year.

Storms Dudley, Eunice, and Franklin in February 2022 led to insurers dealing with 170,000 claims for property damage and paying out £473m to support affected customers.

Meanwhile, record-breaking summer temperatures last year led to several insurers reporting a significant rise in subsidence claims while the cold snap in December led to a surge in claims for damage caused by burst frozen pipes. The full costs of these are likely to materialise in 2023

The impact of new insurance rules

The Financial Conduct Authority (FCA) introduced new rules on the pricing of home and motor insurance on January 1 2022.

These ensure that the price paid by renewing customers for home and motor insurance is no greater than the price charged to an equivalent new customer for the equivalent policy bought through the same distribution channel, such as via an insurer, broker, or a price comparison website.

The rules do not set or cap the level of premium paid by new or existing customers. The price of cover will continue to reflect a range of factors, including the cost of settling claims, the ABI said.

Laura Hughes, the ABI’s manager of general insurance, said: “Last year was a stark reminder that the only thing predictable about the UK’s weather is that no one knows what it will do next.

“Insurers are always ready to support customers when the worst happens. 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.”

Read more

• How to save on your home insurance and get the best deal
• How to understand home insurance jargon.
• Compare home insurance quotes with Go.Compare 

Additional reporting by the Press Association