How do we work out home insurance prices?

Your price can change from person to person, house to house and from one area to the next. It’s based on risk, how likely it is you’ll need to claim and how large your claim could be.

Let’s look at some of the things used to calculate
your home insurance premium

Where you live

Where you live is one of the most obvious things that affects home insurance pricing. Generally speaking, the more your property costs, the more it will cost to insure.

Then you have to think about the area you live in. Are you somewhere with a high risk of flooding? Is there a lot of theft or similar crimes in your area? Anything that increases the chance you’ll have to claim on your home insurance will normally increase your price.

Type of building

Two-up two-down, terraced or semi? Different types, and different sizes, of property are all assessed differently. Insuring a detached house isn’t the same as insuring a flat, for example, so the premium can, of course, be different.

If you think about it, the more it’ll cost to replace your contents or the more your home will cost to rebuild, the higher your insurance is going to be. That’s why we ask you the number of bedrooms, before giving you a price.

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What it's made from

This is again about risk and the potential cost of repairs. Timber is more likely to catch fire than steel or concrete, for example.

So, the materials used to build your property can also change what you pay for home insurance. It explains why houses with thatched roofs often cost more to insure.

Weather

Yep, we said it. What’s the weather doing? It’s no longer just a popular topic of conversation. The increase in harsh conditions, like cold snaps, storms and heat waves, is having a very real impact on people’s home insurance prices.

Worsening wind and rain can increase the number of claims for damaged homes while long spells of freezing temperatures tend to lead to more burst pipes. When working out your price, how likely it is we’ll see these events in the future and the number of customers it could affect, has to be taken into account.

How many claims there are

Simple really, but when there are more people needing to claim on their home insurance, there’s a good chance premiums will go up to make sure you’re covered if the worst should happen.

Even if you haven’t made a claim yourself, an increase in the number of claims reported can lead to an increase in your home insurance price. It’s important to us that we’re able to continue to provide the best possible service for our customers.

Repair costs

When it comes to labour and repairs, you wouldn’t want to cut corners and, from electrical equipment to all the modern comforts we have today, your contents probably aren’t cheap to replace either.

In fact, it’s been pretty widely reported how much repairs and labour costs have been going up. This in turn increases the cost of claims and, you’ve guessed it, home insurance.

Insurance premium tax

12% of every home insurance premium goes towards the government’s Insurance Premium Tax (IPT). It’s like VAT for insurance and if the government decide to increase or decrease it, it can have a direct impact on your premium.

Insurers may also be required to pay into government-backed funds like the Flood Re scheme, created to help insure your home if you live in an area with a high risk of floods.

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