Insuring your property prices a FIFTH greater than final 12 months

Home insurance costs have risen 20 per cent in a year, with insurers blaming bad weather for a spike in claims payouts.

The average buildings and contents premium was £396 in the second quarter of 2024, according to the Association of British Insurers.

That is a rise of 5 per cent in three months from the £375 paid in the first three months of 2024 – and a 20 per cent increase on the £329 paid by the typical home in the second quarter of last year.

Upwards rise: Home insurance costs are increasing steadily, with larger payouts to blame

The average buildings-only home insurance policy cost £321 in Q2 2024, a rise of 7 per cent from the previous quarter. For contents-only cover, the average price paid was £137 – £5 (4 per cent) higher than Q1 2024.

The ABI said unusually extreme weather was the reason for the steady rise in home insurance premiums, as it had caused a spike in the cost of claims.

The average payout per home insurance claim rose 16 per cent on the previous quarter to £5,284.

Overall, claims for damage to homes from storms, heavy rain and frozen pipes reached £144million in Q2 of this year, insurers said.

Subsidence payouts for home insurance claims were also up in the second quarter of the year, hitting £60million – the highest quarterly figure on record and up 12 per cent on the £53million paid in Q1 2024.

Last year was also expensive for weather-related claims, with £573million paid out during 2023.

The ABI said the 2023 surge in bad weather claims was fuelled by a series of storms, including Babet, Ciaran and Debi.

Homeowners also received £153million in payouts for burst pipes, most of which happened in early 2023 due to the cold start to the year.

Consultants EY say that home insurers lose money on underwriting – the job of balancing premiums taken and claims paid, while ideally making a profit.

EY figures show that, in 2022, for every £1 property insurers received in home insurance premiums, they paid out £1.22 in claims and expenses. 

EY expects further losses in 2023 – making it the fourth year in a row that property insurers will pay out more in claims than they receive in premiums.4

ABI policy adviser Louise Clark said: ‘Home insurance continues to play a vital role in supporting customers when the worst happens. 

‘Despite rising cost pressures, insurers remain committed to doing everything they can to offer competitively priced cover and help their customers during a claim.

‘Our latest figures demonstrate the devastating impact that adverse weather can have on people and their homes. That’s why it’s important that the Government takes the opportunity to reform the planning system, to focus on prevention and resilience measures to help reduce our nation’s vulnerability to the effects of climate change.

‘Urgent government action to tackle surface water flooding and maintain flood investments and maintenance will also help reduce the future impact of flooding.’

Households are also paying huge amounts for car insurance premiums, with the typical driver paying £622 a year for motor cover in Q2 2024.

This is a fall of 2 per cent on Q1, but still a rise of 24 per cent in a year.

Car insurers say premiums have had to skyrocket to pay for their inflated costs, such as more expensive motor repairs, claims costs and rising thefts.

The ABI’s home and car insurance figures are the most accurate, as they are based on actual premiums paid, whereas many other indices use premium quotes instead.