A guide to your home insurance renewal quote

Higher levels of inflation are one of the factors that makes home insurance more expensive.

The latest figures from the Association of British Insurers show that home insurance premiums rose 16% over the 12 months from Q3 2023 to Q3 2024^[1]. The good news is that the tide seems to be turning as it has started to slow down and has improved per quarter. Prices increased by 3% in the first quarter of 2024, down from 4% compared to the same time in 2023.

Home insurance prices are still high because materials, labour and repairs have all increased.

Inflation and cost of materials

Insurers continue to face higher costs for specific materials, labour and replacement items, which make it more expensive to rebuild or repair damage or to replace stolen or damaged property.

Materials cost inflation in construction is decreasing generally. However, government figures show repair and maintenance prices (which insurance repairs come under) rose 0.2% during the 12 months to August 2024^[2].

A deep dive into some key home maintenance items is more revealing, with those involving reinstatement or repair showing higher price increases:

• Pipes and fittings (flexible) 19.3%
• Metal doors and windows 17.7%
• Painting and decorating 7.73%^[3]
• Plaster and jointing accessories 5%
• Plasterboards 2.9%^[4]

So, if your pipes in the bathroom have leaked, the repair will require plaster, paint and new pipes and fittings. Combine the higher cost for each of these elements, and it increases the total cost of the claim.

If there is a waiting list for materials and labour, this means longer claim handling times and higher costs, such as paying for alternative accommodation. Waiting times are also likely to be longer when there are severe weather events that affect multiple customers at the same time.

One of the factors affecting home insurance renewal price is the increasing number of claims related to significant weather events. 2024 saw many records broken, including the most number of named storms in the UK and Ireland, reaching 12, ending with Storm Lilian.^[17] 2025 looks like it could also be eventful, having already seen 2 large storms in the UK.

Climate change contributed to the heavy, frequent, and intense downpours we saw, according to a recent study by the World Weather Attribution Group.^[5] It says climate change will increase the likelihood of flooding and other damage.

Another factor affecting home insurance prices is higher labour costs and skills shortages in construction. These factors impact the cost of repairs, forcing insurers to pass on the costs at higher prices.

Latest Construction Skills Network report shows that UK construction will need 251,500 extra workers by 2028^[6] to meet demand. A year ago, when the forecast was 225,000 new trade operatives required by 2027, cost consultant Currie & Brown described it as a ‘cliff edge’ that threatened key infrastructure projects^[7].

Rising labour costs are also a contributor. A PlanRadar report shows that 65% of housebuilders face wage increases, with 76% saying labour shortages had delayed projects.^[8]

Although insurance repair operates in a different sector to these projects, our market finds that skills shortages in other areas directly affect contractors focusing on this work, as it pulls tradespeople into other sectors with higher wages.^[9]

Energy cost increases are another part of the inflationary pressures leading to higher premiums for your home insurance. Although the wholesale price has dropped since the highs caused by the invasion of Ukraine, there’s a time lag before companies will benefit. The increased energy costs have increased the operational costs for insurers and the suppliers we work with, and these additional costs will increase the cost of repairs and thereby the cost of premiums

See how energy costs also affect motor insurance.

In addition to your premiums, you pay Insurance Premium Tax (IPT) rather than VAT on home insurance and other insurance products. IPT is percentage-based, so the higher the underlying premium, the more you pay.^[10] The average IPT Ageas home insurance (for all covers) is £34.50. 

There were 2.7 million theft offences, including burglary, in England and Wales for the year ending March 2024, figures similar to 2023^[11]. In Scotland, there were 1,922 robbery offences in 2023/24; an increase from 1,623 in the previous reporting year^[16].

However, your home insurance premium may be higher if you live in a region with a high crime rate. Insurers use postcodes to calculate the risk of crime, among other factors ^[12].

We will research where you live. Knowing the crime rate, flooding or subsidence in your areas, and the claims people make helps us establish your risk.

Your insurance renewal quote could rise if you have added additional high value items, like antiques. To keep up with inflation you may also have to revalue your contents and specified items to ensure they're adequately protected. 

Some insurers will reduce your home insurance price if you have alarms fitted or smart devices that detect and deter burglars.

If you have claimed on your home insurance, it could increase your premium at renewal. Some claims may have little affect but many or significant claims could make your insurer think you are more likely to claim in the future. ^[14]

If you share your home with tenants or lodgers, your insurer may consider them a higher risk. You must tell your insurer if you’re considering taking on people who share your space (lodgers, including Airbnb) or those living in a separate space (tenants) ^[15].  

If you work from home, we do cover clerical business use with no stock, staff or visitors, this means we cover business equipment and allow for business visitors, depending on volumes. However, for high volumes of non-clerical business use with stock, staff and visitors you would require a different policy.

Your premium could also decrease if you rarely leave the building empty.

During the quote process, you are asked to assess the cost of rebuilding your home. You can calculate the rebuild cost using the Building Cost Information Service's house rebuilding cost calculator. N.B. Remember this is only a guide and you must take into account any special features of the property. If you are in any doubt, you should seek a professional valuation

Insurers will base their risk assessment on your home's size, how it was constructed, when it was built, and whether it's detached, semi-detached or terraced. Rebuilding costs are not the same thing as the purchase price and in many cases can be higher. The limit must be adequate to rebuild the whole property from scratch. If this is not adequate, it is not just a case that an insurer will pay up to the limit, cover could be invalidated completely or only a proportion of a claim paid.

Don't forget to tell your insurer if you want to increase this or if you have extended or made significant changes to your home.

Read related article: https://www.ageas.co.uk/solved/your-home/what-factors-will-affect-the-cost-of-your-home-insurance/