A complete guide to how home insurance renewal works
Do you let your home insurance automatically renew without giving it a second thought?
Many of us do, so we’ve written this explanatory guide about the home insurance renewal process including how to save money on your next policy and things to consider when renewing your cover or switching home insurance providers.
In this guide:
No, you shouldn’t, not without comparing quotes for a new home insurance policy online first. You may be surprised to learn that many other insurance providers will offer you a better deal and very often, you could even get much cheaper insurance from your existing insurance provider, but usually only if you’re a new customer!
This is the case for both home and car insurance.
If you do find a better deal with another insurer online, however, it is worth telling your current insurance company about it - they may be able to match the quote for your renewal or even get you a cheaper deal! If you don't ask, you don't get.
As reported by the BBC, Charles Willoughby, who discovered that his existing insurer was offering new customers car insurance for £300 less than his auto-renewal fee, complained to his insurer who then agreed to match the new customer price.
So if you have your home insurance set to auto-renew, make sure you shop around a few weeks before your policy is due to renew so that you can make an informed decision about whether this is a good idea or not. It only takes a matter of minutes to compare quotes online and could save you hundreds of pounds.
Also, when your insurer notifies you that your insurance is due for renewal, the Financial Conduct Authority’s (FCA) rules state that insurers are obliged to tell you what price your premium was the year before. Thankfully, these recent rules make comparing quotes much easier.
Your house insurance renewal will happen automatically every year if you agreed to auto-renewal when you took out your insurance policy and have never told your insurer that you wish to cancel auto-renewal.
Beware of changing your mind about auto-renewal once your policy has been renewed, as your insurer could charge you for the number of days the insurance covered you for up to the date you cancelled your insurance and could they also charge an admin fee for cancelling your policy.
Note: You do have a 14-day ‘cooling off’ period in which you can cancel your car insurance and should it still prove cheaper to take your business elsewhere (taking into account your current insurer’s charges and/or admin fees) then you can go ahead and switch insurers up to 14 days from the date the policy started.
Yes, automatic renewal of your insurance (whether it’s car or home) is completely legal as long as you agreed to this at the outset of your policy and only if your insurer reminds you that your policy will shortly auto-renew (usually via email), unless you tell them otherwise. A renewal notice is usually sent to the policyholder around three to four weeks before your insurance is due to renew.
Auto-renewal is in place to prevent homeowners from being left uninsured in the event they forget to renew their home insurance policy. Plus, if you have a mortgage, buildings insurance is mandatory.
Your house insurance usually increases if you stay with the same provider as they rely on people not realising or bothering to change their insurance providers and thus make money by charging you more.
Most people who auto renew and do not switch home insurance providers are blissfully unaware that rather than being rewarded for their loyal custom, they are effectively being financially penalised. This unscrupulous practice, where insurers sneakily and gradually increase home insurance renewal costs (referred to as ‘price walking’ by Martin Lewis), has been recognised as such by the Financial Conduct Authority (FCA).
The FCA proposes making changes to their rules to try and stop insurers charging existing customers more than new ones. Until the end of January 2021, there was a consultation process and the FCA is (at the time of writing - Feb 2021) yet to make an announcement about these eagerly anticipated new rules and when they might come into effect.
So ‘watch this space’ and remain vigilant when your home insurance is due for renewal by shopping around for cheaper deals online.
Learn more: What is the average cost of home insurance?
Research carried out by Money Saving Expert (MSE) has revealed that the optimal time to renew home insurance is approximately 3 weeks before your policy is due to renew. So every year, put a reminder in your diary at least 21 days before your insurance renewal date to make sure you remember to shop around for cheaper deals.
According to research, you could save up to 20% by renewing your policy three weeks in advance.
Items you should consider when renewing your home insurance are:
- Electrical entertainment items: TVs, gaming consoles, laptops, PCs, mobile phones
- Furniture: sofas, tables, sideboards, beds, wardrobes, dressing table, drawers
- Exercise equipment: exercycle, treadmill, bicycle
- Personal belongings: ornaments, paintings, jewellery, clothes (check if clothes are covered), handbags, toys
- White goods: fridge, freezer, washing machine, tumble drier (not built-in appliances)
- Kitchen equipment: cooker, coffee machine, kettle, microwave, toaster, crockery
- Furnishings: carpets, curtains, bedding, etc
It's a good idea to keep receipts for all household items you purchase as your insurer may require sight of these should you ever need to make a claim, although they may accept bank or credit card statements in the absence of a receipt.
Things to consider since your last insurance renewal:
- Have you bought any expensive items in the last 12 months?
- Could anything have significantly increased or decreased in value in the last year?
Random examples of items you may have bought since your last renewal that could affect your home insurance:
- An expensive new mobile phone
- A laptop or PC
- Big items of furniture
- A high-end coffee machine
- A bicycle or treadmill because the gym was closed during lockdowns!
Items which were high-value when you last took out insurance may have considerably depreciated in value after a year. For example, a new mobile phone decreases in value by a whopping 43% in just 12 months.
In the last year, you may have sold expensive belongings like a designer watch or handbag on eBay that no longer need insurance cover. If expensive items are specifically included then, of course, removing these items from your cover will bring down your home insurance costs.
Jewellery is another item which could have excessive value and you should ask your insurer what their ‘single article limit’ is (i.e. the maximum value that will be paid out to replace a single item) to ensure expensive jewellery items are fully covered.
Jewellery (like antiques or even a rare whiskey collection) can increase in value over time and if you’ve never had certain (expensive) items valued, this is something you should do.
Make sure you use a reputable, registered valuer for any valuations so that it is accurate and worth more than the paper it’s written on!
Compare online quotes for home contents insurance here.
Since you last took out buildings insurance, have you had any significant work/renovation done to your property which could increase your house value or affect your ability to make a claim like:
- A conservatory
- En suite or wetroom
- Garage or loft conversion
- Granny flat
Note: Ideally, you should make your insurer aware of any major construction works to your property before they take place.
Compare online quotes for home buildings insurance here.
For more information and advice regarding home insurance, take a look at our handy guides below.