Home insurance premiums reach record high

Already-stretched households are facing a further blow, as home insurance prices have hit a record high of almost £400 a year.

New data from the Association of British Insurers (ABI) shows premiums – the amount you pay towards a policy – set households back by £396 between April and June, more than £20 higher than the same time last year.

How much have average policies gone up by?

• home insurance increased by £21 –  from £375 to £396
• buildings-only policies increased by £23  – from £298 to £321
• contents-only policies increased by £5  – from £132 to £137

The ABI says the average premium for a combined policy is 19% higher than the same time last year, though it’s below 2017 prices (when adjusted for inflation). In real terms, combined policies are 2.5% cheaper than seven years ago.

Why have policy prices increased?

Insurance premiums can fluctuate, whether that’s for your home or car. People in the industry say high prices are down to several factors, including:

• increased numbers of claims, especially due to weather damage
• a rise in labour and materials costs for repairs
• changing regulations and human behaviour

Payouts have also gone up

It’s not all bad news. If you do make a claim on your policy, it’s likely you’ll get more money as payouts have also hit an average high of £5,284. The ABI says this is 45% more than in 2017 and 16% higher than last year.

Tips to reduce your home insurance costs

If you’re struggling to cover your insurance costs, you can shop around using a price comparison site like Confused.com, Compare the Market, GoCompare or MoneySuperMarket. 

It’s cheaper to pay for the full year as you’ll avoid the added interest that comes with paying monthly, so pay annually if you can.

Renewing your policy a few weeks early could mean you can get it a lower premium – check whether that’s possible.

Top tip: a combined policy might be cheaper than paying for separate buildings or contents policies.

Make sure your excess (what you pay towards a claim) is an amount you can afford. Increasing your excess can bring your premium down as it means your insurer needs to pay out less. Be realistic in what you can reasonably afford, in case you need to claim.