What affects the cost of home insurance?

Home insurance should be considered if you own a property and the cost of your home insurance policy depends on a number of factors including the type of policy you choose, your policy excess and where you live. In this article, we take a look at all of the factors that affect the cost of home insurance as well as ways you can save money on your home insurance policy.

What is home insurance?

Home insurance is an insurance policy designed to cover the rebuild, repair or replacement costs if your property or the contents inside the property are damaged or destroyed. There are two main types of home insurance; buildings insurance and contents insurance. Buildings insurance covers the rebuild cost of your home or repairs for damage to the structure of your property. It also covers the cost of damage as a result of flood, fire or storms in addition to damage caused by subsidence and leaks.

Contents insurance covers the cost to repair or replace items within your home including personal possessions, kitchen appliances and furniture. You are usually able to claim on your contents insurance for damage caused by fire, flood, loss and theft. It is unlikely that you will be able to claim on your contents insurance policy for accidental damage unless you have purchased additional accidental damage cover on your policy.

How much home insurance do I need?

When it comes to deciding how much buildings or contents insurance cover you need, you should work out how much it will cost to rebuild your property as well as the amount it will cost to replace the valuable items in your home. If you have recently had your property surveyed the surveyor is likely to have estimated the rebuild cost in the survey which you can use to generate your home insurance quote. Alternatively, you can use the Association of British Insurers (ABI) rebuild cost calculator.

If you are looking to take out contents insurance, you can calculate how much you need to insure by writing down each individual item in your home that you would like to replace if it was destroyed and its estimated value. You may need to do some additional research if you have particular items in your home that are antiques or you are unsure how much they would cost to replace. There are often contents insurance calculators online that can help to estimate this cost.

How much is home insurance?

How much you pay for your home insurance policy varies depending on a number of factors, listed below. According to the ABI, the average annual cost of a buildings insurance policy in the first quarter of 2024 was £298 compared to £132 for contents insurance. If you bought a combined buildings and contents insurance policy the average annual premium for the start of 2024 was £375. For more information on home insurance and how much it costs, read our article 'How much does home insurance cost?'

What affects the cost of home insurance?

Insurance quotes are based on the level of risk and as a result, there are numerous factors that can affect how much you pay for your home insurance policy. We have provided a detailed list of the factors that impact the cost of home insurance below.

Policy type

The type of home insurance policy you choose will affect how much you pay. Buildings insurance is likely to be more expensive than contents insurance as you are likely to be insuring a higher amount when compared to contents insurance. According to data from Go.Compare (based on policies taken out in the second quarter of 2024), buildings-only insurance costs on average £207 while contents-only cover costs around £72. If you want to save yourself some money on your home insurance you may wish to purchase a combined buildings and contents insurance policy as some insurers offer a discount on combined policies. For more information on home insurance and the different types, read our article 'What are the different types of home insurance?'

Property type

The type of property you are trying to insure will affect how much you pay. According to data compiled by Go.Compare from April – June 2024, flats on average were cheaper to insure than houses or bungalows with flats averaging £229 a year and houses and bungalows costing £243 and £234 on average, respectively. If your property is a listed building you are also likely to pay more for your insurance.

Property location

Where you live will affect how much you pay for your home insurance. Insurers consider a number of factors based on your location including if your property is in an area susceptible to flooding or more prone to vandalism or theft. If you live in London you can expect to pay more for your home insurance policy compared to properties in other areas of the UK such as the North of England. Data collected by Go.Compare between April and June 2024 found that the average cost of combined buildings and contents insurance in Greater London was £351 compared to £206 in the North East.

Property size

The size of your property will determine how much you pay for home insurance. If you have a bigger property with more bedrooms you are likely to pay more on your home insurance as there is more that needs to be insured.

How much you decide to insure

If the rebuild cost on your property is high this is likely to be reflected in your home insurance premium cost. This is the same for contents insurance. If you don't have a lot of high-value items that you wish to insure, your contents insurance is likely to be cheaper. It can be hard to estimate how much you need to insure your property and contents for. There are numerous handy calculators online that can help you to estimate the cost.

Additional extras

If you choose to add additional extras to your home insurance policy then this is likely to increase the amount you pay for your home insurance policy. It is worth looking at whether you need any of these extras and if the additional cost is worth the cover. Examples of additional costs are legal cover and accidental cover.

How to reduce the cost of home insurance

How much you pay for your home insurance policy varies depending on numerous factors including the property size, its location and the amount you are insuring. We share some ways that can help you to try and reduce the cost of your home insurance policy but for more money-saving tips, read our article 'How to save money on your home insurance'.

Shop around to get the best deal

When looking for home insurance, it is best to get a number of quotes from different providers so that you can compare the cost and find the best deal for your circumstances. When comparing home insurance policies always make sure you are comparing like-for-like policies to ensure you are making a fair comparison. One of the easiest ways to do this is via a comparison site such as Quotezone*. Remember though that not all comparison sites are whole of market and so you may get a better deal directly with an insurer.

Increase your excess

One way to reduce the cost of your home insurance policy is by increasing your policy excess. Usually, the more you choose to contribute towards the cost of a claim the cheaper your policy premium. However, you need to remember that this is the amount that you will have to pay in the event of a claim so you don't want to make it unaffordable.

Build up your no claims

If you don't claim on your home insurance policy over a number of years you will build up your no claims bonus which may entitle you to a discount with some insurers.

Purchase combined buildings and contents cover

If you choose to purchase a combined buildings and contents insurance policy you may save money as some insurers offer a discount for combined home insurance policies.

Pay your insurance premium annually

Paying your home insurance premium annually can save you money as some insurers add a credit charge for monthly instalments. Damien explains more about this handy trick in the following video.

How to buy home insurance

When buying a home, your mortgage provider or broker may recommend some home insurance providers but these may not be the best price for your situation. A comparison site is one of the quickest and easiest ways to get a home insurance policy. Comparison sites allow you to compare multiple insurance providers at once to find the best deal for your needs. We have partnered with Quotezone* so that you can search and compare quotes from up to 50 UK home insurance providers. One thing to consider when it comes to comparison sites, however, is that they are not always whole of market which means that you may be able to get a better deal with a provider such as Direct Line.

 

 

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