What is the average cost of home insurance?

And how can you save money on your next policy? Find out here...

October 19, 2020

A wooden house next to a key labelled insurance

The average home insurance cost in the UK is now £146.04 (for a combined buildings and contents policy) and premiums are generally the highest they've been since 2013.

This is according to MoneySuperMarket's latest UK Price Index, which includes data and statistics from the second quarter of 2020 (April, May and June).

The average cost of £146.04 per year represents a 3.68% increase on the previous year (2019), but still offers incredible value for money – especially when you consider the average value of house contents in the UK now stands at around £35,000 (depending on your location).

An average house insurance cost of a little over £3 per week (£12 per month) to cover your contents is just good financial sense.

Plus, depending on your circumstances, you could find a deal that is even cheaper than that.


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How much is buildings insurance?

The average premium price for a buildings insurance policy is now £113 per year according to the MoneySuperMarket's data.

That’s an increase of 10.78% over the past year, as the average price of buildings-only policies was £102 in Q2 of 2019.

If you are interested in a building’s only home insurance policy, find out more here: Buildings Insurance

How much is contents insurance?

For contents insurance, the average cost per year is £66, which represents a 4.7% increase compared to last year.

If you want to find out more about contents insurance, go to: Contents Insurance

MoneySuperMarket's average home insurance premium costs are calculated based on customer quotes from approximately 55 insurance companies in the UK. This is, therefore, a reliable indicator regarding the average cost for combine home insurance as well as for separate buildings and contents insurance.

The general trend over the past few years has seen a gradual increase in the cost of home insurance, which has been blamed on the increase on Insurance Premium Tax as well as the rising cost of the gadgets and other contents in our homes, but mainly, it has occurred because of more volatile weather in the UK – notably Storm Ciara and Storm Dennis that destroyed many homes and possessions at the start of 2020 in the UK.

The below graph shows the slight but gradual increase in premiums for combined home insurance policies over the last three years:

The cost of home insurance on average over 3 years by MoneySuperMarket

Source: MoneySuperMarket

The impact of Covid-19 on residents

As well as MoneySuperMarket's latest data, Consumer Intelligence also reveals that the average house insurance cost is currently a slightly higher £151.00 per year.

Surprisingly, it reports that in May 2020, 14% of homeowners in the UK were considering cancelling their contents insurance policy due to the fact they are now spending more time at home (working, protecting others, etc.).

Additionally, a further 11% of homeowners are considering either cancelling their policy altogether or reducing the amount of cover to lower the price, mainly because of personal financial difficulty that has stemmed from the Coronavirus pandemic.

According to the latest figures from the Association of British Insurers (ABI), last year in 2019, around one in four UK households didn’t have a contents-only insurance policy in place, which equates to roughly 6 million people. With the average value of house contents being about £35,000, this means that approximately £210 billion pounds worth of valuables are not insured against risks such as theft, fire, flooding and accidental damage.

And it is likely that this year in 2020, we will see even more valuable contents at risk due to many people thinking about ending their policies to save money.

Mark Shepherd, Head of Property at the ABI, said:

"The value of possessions owned by the average household will come as a shock to many. But with the list of ‘must haves’, such as electrical gadgets, ever expanding it can be easy to underestimate the worth of your contents.

"These figures further highlight what can be at stake for many who have no contents insurance. With a wide variety of policies available, including no-frills policies tailored to people on limited budgets, insuring your possessions can mean that if the worst happens you are not left counting the cost for years to come."


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How to get cheaper home insurance quotes

As well as the rise in Insurance Premium Tax, other factors are also influencing the rising cost of home insurance – including the number of claims being made, fraud, the Covid-19 pandemic and the bad weather that took the UK by storm in early 2020.

In such a demanding market, it’s important that you do what you can to get the cheapest deal on home, buildings and content insurance.

Generally, policyholders that stay with the same insurer every year tend to get charged more in the form of loyalty tax. This means that loyal customer’s premiums slowly creep up (a technique known as ‘price walking’) without them realising and for no real reason.

Customers who switch providers every year, however, are usually offered the best deals on the market because they want to entice new customers to join.

Compare quotes now to see how much money you could be saving on cover:

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Below are some factors that can influence the price of home insurance and some things that you'll need to consider if you want cheaper premiums.

What policy do you need?

There are three main types of home insurance policies:

  • Buildings insurance
  • Contents insurance
  • Combined buildings and contents cover

Combined buildings and contents policies tend to be cheaper than buying two separate policies (one buildings and one contents policy), and it is generally the most common, but separate buildings and contents options exist for a reason – so be sure to check out exactly what level of cover you need before signing up to a policy.

It’s important that when giving your insurer a value of your home contents, you make sure this figure is as accurate as possible to avoid under- or over-insuring yourself. Likewise for buildings cover, you only need to work out and provide the cost for rebuilding the property, which is usually less than the amount you purchased it for.

Increase your excess

The level of voluntary excess you opt for on top of any compulsory excess the insurer sets can have a big affect on the price of your home insurance premium.

The higher the excess, the lower the premium – but it is important to make sure that you only set it to an amount you can definitely afford to pay in the event that you want to make a claim on your policy.

Find out more here: What to do if you can’t afford your excess

Optional extras

You could be paying for extra cover that you may not really need on your policy, for example:

  • Accidental damage cover
  • Personal possessions cover (to cover items you usually take away your home – e.g. camera, mobile phone, bikes, etc.)
  • Home emergency cover
  • Family legal protection

Most people generally prefer to have all of the above included in their policy so they have extensive cover in place, but there may be other add-ons that you perhaps don’t need, such as garden cover or boiler cover, for example.

Make sure you fully understand your policy terms and be sure to contact your insurer to get rid of any unnecessary cover, as this should hopefully bring the cost down.

Remember, for items that cost more than the standard £1,000 individual item limit, such as tablets, laptops and jewellery, these will need to be listed separately on your policy.

You might like: 10 Things that Could Void Your Home Insurance

Claims history and no-claims discount (NCD)

Just like with car insurance, if you have made a claim on a home insurance policy in the past then you may find that you will get quoted higher premiums as a result.

If you are considering making a claim on your home insurance policy, make sure it will be worth your while financially.

To prevent policyholders from making regular small or insignificant claims on their policies, insurers offer customers a no claims discount (or no claims bonus – NCB). This means that the longer you go on your policy without making a claim, the higher the NCD you will build up and receive on your next policy – some insurers offer as much as 70% off their cover, according to Confused.com.

Your address

If you live in a high-risk area, e.g. a location that has a high crime rate or high risk of flooding etc. then you will likely find that it costs more to get home insurance cover.

Of course, we don’t suggest moving homes in order to get cheaper cover, but it is worth knowing and is something to bear in mind if you ever do decide to move.

Remember, if you decide to move or there have been any other significant changes in your life (working from home, adding expensive items to your home, etc.) then you should contact your insurer to inform them and to make sure that you are still fully covered.

The type of property

Insurance companies tend to quote different prices depending on whether you are living in a house, bungalow, town house, flat, studio apartment or bedsit etc.

According to MoneySuperMarket, people who live in flats or apartments generally tend to pay more for combined buildings and contents insurance on average, with average policies costing around £150.30.

The majority of people who live in flats or apartments choose to take out contents cover only, as building insurance is usually the landlord’s or leaseholder’s responsibility. Just make sure you understand which type of cover you need – you could be paying much more for your home insurance policy if you don’t need buildings cover.

Additionally, it’s worth noting that those living in bungalows tend to get offered the cheapest premiums, with an average combined policy costing around £129.23

Size of the property

Usually this is determined by the number of rooms in the property, including living rooms, bedrooms, kitchens and bathrooms.

Is it a listed building?

A Grade 1 or 2 listed building need to be repaired by specialist contractors and they can only use certain materials, so as well as costing more to repair, they may also be more accessible for thieves. Subsequently, home insurance premiums will cost more.

Home office use - Working from home/remotely

If you work from home then your premium may be more expensive. It’s also worth pointing out that, depending on your type of business, you may not be covered by a standard policy so you may require a specialist business policy.

If you have to work from home due to the Coronavirus pandemic then you may not need to inform your insurer – provided you are doing office, computer-based work. If your employer has provided you with equipment to use, they should have their own insurance policy to cover this.

If you’re running your own business from home and you have a lot of stock there, you’ll need to tell your insurer.

Similarly, if you’ve bought new items to help you work from home, you may need to increase the value of your contents cover, in which case you’ll need to let your insurance company know.

Learn more: Home insurance advice for people who work at home

Home security

Obviously, the more secure your house is, the less risky it is to insure, which can lead to cheaper home insurance premiums.

The type of locks you have on doors and windows, the number of entrances and whether or not you have a burglar alarm or security system fitted are all factors that can influence the cost of your insurance.

If you install security cameras or add a home security system to your home, make sure you contact your insurer to let them know – this should hopefully reduce the cost of your cover.

Read more: Over 60% of Burglaries Happen When Someone is at Home

Learn more:


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