What affects the price you pay for your home insurance?

A number of different factors influence the price you pay for your home insurance. When insurers work out what price is right for your property, they look at the level of risk you and your property present. The more likely a property is to experience an event that could cause a claim, and/or the higher the value the insurer has to cover, the more you’ll likely need to pay for your policy.

However, it's not just your home that can impact what you pay, external changes such as new regulations, tax changes made by the government or fluctuations in the economy can also mean your price will change.

So, let's look at some of the things you might ask yourself when it comes to what’s impacting the cost of your home insurance when you first take out a policy and at renewal:

Does where I live affect how much I pay for my home insurance?

Yes, where you live will impact how much you pay to insure your buildings and contents. For example, if your home is in an area which has flooded before (or is likely to flood) or you live in an area with high crime levels, you are more likely to experience events that give rise to a claim. This increases the likelihood of you making a claim and could result in you paying more for your cover.

How does the type and size of my home affect my home insurance quote?

Different types of homes such as detached, semi-detached, terraced houses, flats and other types of properties are all priced differently when it comes to home insurance. The size of your property is a key factor when an insurer offers you a price. The bigger the property, the more expensive it is to rebuild in the event of a ‘total loss’ claim (if your home is completely destroyed) such as a fire, therefore the more expensive it is to insure.

Each year, insurers typically pay out more for the damage caused by leaking or burst pipes than any other claim type, so the number of bathrooms also influences the cost of your insurance. A higher number of bathrooms (including downstairs toilets) means there’s a greater risk of burst pipes and water damage to a property. Any increased risk is likely to result in an increased cost of insurance.

What impact do the materials used to build my home have on my home insurance?

How your home has been built and the materials used can affect the price you pay. For example, homes that are listed buildings or those with a thatched roof are more expensive to repair because of the need for specialised labour skills to restore the property to the condition it was in before a claim, so insurers are likely to charge more to protect these kinds of properties.

Does home insurance get more expensive the more people there are living in the property?

The most common claim insurers receive is for accidental damage. Since it's mostly people that cause accidents, the more people, particularly children, that live in a property, the more chance there is of accidental damage occurring and therefore the more you may need to pay for your insurance.

How does my claims history impact the cost of my home insurance?

Insurers will want to know if you've claimed on your insurance in the past (usually any claims in the last 5 years) when deciding how much you need to pay for your insurance going forward.  Normally insurers will also offer you a discount based on how many years with ‘no claims’ you have.

Looking at a customer’s past claims history generally indicates what claims they might make in the future. Even though sharing information on your past claims might put your price up, it’s really important to be honest. Not sharing this information can be seen as insurance fraud and could mean any future claim could be declined so it's just not worth the gamble.

How do repair and labour costs impact my home insurance cost?

It can feel frustrating if you don't make a claim but see the cost of your insurance go up at renewal. Unfortunately, everything from sofas to laptops is becoming more expensive to replace and the increasing labour costs also mean it’s becoming more expensive to carry out repairs. With costs for replacement and repairs going up, insurers have to charge more for their insurance to make sure they have enough money to cover the cost of the claims they need to pay out.

Do other people’s claims affect the price I pay for my home insurance?

Insurers will be paying out on thousands of home insurance claims every month then, if the number of claims goes up, due to things like increased accidental damage claims or extreme weather events, this could mean the costs to insure your home could go up. 

For example, long periods of freezing weather damage to homes -can increase the number of claims for things like burst pipes.

Therefore, when insurers calculate your home insurance price, they look at how likely it is for severe weather conditions to happen in the future and how many customers might be affected.

Does the government have any impact on the price?

Government changes to tax rules can also affect your price. For example, if the government decides to increase Insurance Premium Tax (IPT) then your annual price will go up too.

Another example of a government change which could impact you is the Flood Re scheme. In 2016 the Government introduced this scheme to help people living in flood-risk areas get a home insurance quote. The scheme also helps insurers pay out when the homeowner makes a valid claim for flood damage. In return, insurance companies signed up to the scheme must pay premiums and an annual levy to Flood Re to fund the scheme. Any changes the government make to this scheme could impact those people in flood-risk areas.

Since there are lots of different things that can affect the price you pay when buying insurance. It's very important you answer the questions needed to give you a quote as accurately as possible to make sure your quote reflects your individual circumstances. If you don’t answer correctly, you could find that you aren’t able to make a claim when you try to. 

Article last updated: 15/03/2024

Get more insights from our insurance hints & tips

The importance of financial advice banner 1

The importance of financial advice when buying home insurance

Selecting the right insurance for your needs is important - here's why seeking financial advice when doing this can be invaluable

In Insurance tips

Insurance lingo banner 1

Home insurance lingo

Get to grips with some of the jargon that's used when discussing your home insurance needs.

In Insurance tips

Cost of living banner 1

The cost of living crisis - What will this year bring?

What does 2024 have in store following last year's rise in the cost of living crisis? Explore the view for the next 12 months and find some advice if under financial pressure.

In Insurance tips