The average price paid for home insurance has risen by 6%, according to the Association of British Insurers (ABI),jumpingfrom 298 in the first quarter of 2022 to 315 in the same quarter of this year.
Market analysts Consumer Intelligence also found that the average quoted premium for a combined buildings and contents policy increased 6.7% in the year to April 2023.
More expensive premiums mean it\’s more important than ever to choose the right policy for your circumstances. Here, which one? takes a closer look at what\’s behind the price hike and gives advice on how to find the best coverage.
Why are premiums more expensive in 2023?
The average combined buildings and contents policy was 315 in Q1 2023, which is 17 more than in 2022 and 10 more than the previous quarter.
The increase, however, is less than last year\’s inflation rate. This is despite waves of complaints related to weather conditions and more expensive building materials.
Over the course of 2022, home insurers paid out $2.5 billion to help customers cope with unexpected events, such as storm damage, according to ABI\’s insurance premium tracker, a survey examining the prices paid by homeowners. customers for hedging, rather than listed.
New Financial Conduct Authority (FCA) rules introduced on 1 January 2022 prevent insurers from offering better deals to new customers than they do to renewing customers. But they do not establish or limit the level of premium paid by new or existing customers.
The price of cover will therefore continue to reflect a number of factors, including the cost of settling claims, the ABI said.
- Find out more: best and worst home insurance
What does a good policy look like?
Choosing a home insurance policy can seem like a minefield of options. From deciding how much coverage you need to setting the right level of deductible. Here are five of our top tips to help you make up your mind:
1. Check out our Best Buy Picks
Our new Best home insurance purchases can help you separate the wheat from the chaff in your search for a good deal.
Best Buys are awarded to policies that in our analysis stood out for offering particularly high levels of coverage and, after interviewing thousands of customers and examining 78 policies, we gave the endorsement to 24 buildings and contents products.
You can see the complete list of best buys Herealong with a table ranking customer-rated insurers from best to worst.
If you want a larger comparison of home insurance coverage, take a look at our analysis of building policies AND content policies.
2. Think excess
The insurance deductible is the amount you have to pay for the total cost of an insurance claim. Your insurer will then contribute the remainder up to the limit of your coverage.
It is usually a pre-agreed amount which is fixed when a policy is purchased. The higher the deductible, the cheaper the premium, but it\’s important to consider how much of a claim you could comfortably afford to pay for yourself.
- Find out more: how to find cheap home insurance
3. Set the right amount of coverage
Review your policy carefully to make sure you aren\’t paying anything superfluous. For example, not everyone needs both building and contents insurance. If you need both, some insurers will offer a discount when you buy combined coverage.
To figure out exactly how much coverage you need, it\’s important to calculate the value of your home\’s contents and how much it would cost to rebuild your home. If these figures are too high, you will pay more than necessary for your home insurance. If they are too low, you could be left with no money if you have to file a claim.
To find out the reconstruction price of your property (this will be lower than the value), you can use the ABI free calculator to help you estimate this. Alternatively you can hire a residential property surveyor.
To work out the combined cost of your content, start by writing down everything worth insuring, then do an online search to get a rough idea of what expensive items like antiques are worth, or ask a specialist to appraise them. You can also use the Which? content calculator to help add up the total value of your assets.
4. Is the price right?
If you\’ve done all your research and found the right policy for your circumstances, then it\’s time to look at the price tag. Of course, cheap doesn\’t always mean better, but it has to be affordable for your budget. If your policy is up for renewal and you feel it is still a little too expensive, you can try haggling with the insurer for a lower price.
We interviewed 14,408 Which ones? members who renewed or switched auto or home insurance between May 2021 and June 2022. Among members who discussed their premium with their insurer, 48% were able to get a price reduction.
But you don\’t need a PhD in contracting to get companies to change their premiums—sometimes a friendly phone call and asking for a better deal is all it takes. If that fails, that\’s when all the knowledge gained from shopping around comes in handy. Give them some examples of better deals elsewhere and try to negotiate. Of course they could say no, in which case you are free to switch to one of their rivals.
5. Seek help from a specialist
Customers who live in unconventional properties or houses with unusual problems may need to look further afield for the right policy. For example, if you live in a thatched cottage or a house affected by subsidence.
In these cases, you will need to look for insurers and brokers who specialize in particular types of risk. For help locating one of these providers, visit the British Insurance Broker\’s Association website and use theirs \”Find insurance\” tool.. Or you can call their helpline on 0370 950 1790.
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