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What affects the cost of your home insurance

  • 16, Nov 2021
  • Read time: 12 mins

From location to past claims, a whole range of factors make up your home insurance premium and impact the price you pay for it. We’ve created this handy guide to break this all down. So you are fully in the know when it comes to your insurance price.

A row of new homes on an estate.

Why your home insurance premium could change

It’s likely you have noticed a change to your premium price at some point. Why does this happen? Well, several factors play a part. 

  • Cost of claims – Every year, we pay towards repair and replacement costs to help settle customer claims. More claims or a rise in repair costs can impact your insurance premium
  • Technology – As many homes become more advanced, the cost of replacing everyday appliances like ovens and boilers may be on the up. But so are the number of smart home security devices you can connect to. These include video cameras, locks, door and window sensors and lights. Using new technologies to secure your home may (depending on your insurer) reduce the cost of your home insurance
  • Fraud – Insurance fraud can impact innocent policymakers. This is why we invest in advanced technologies to identify and prevent fraud. We also work hand-in-hand with fraud prevention and law enforcement agencies to stop scammers in their tracks
  • Taxes – Taxes paid to regulatory bodies and the government are included in our price. Any future rises might impact the cost of your home insurance. For example, if Insurance Premium Tax (IPT) was to increase, insurers would need to account for this on every policy
  • Severe weather – Our weather is changing and becoming more prone to extremes. Cold snaps, floods, heatwaves, and storms can cause damage to homes. If severe weather conditions are likely to re-occur, this gets factored into your cover.

Changes to your personal details

Insurers will look at your personal details to work out a price that’s right for you, including: 

  • The number of people in your household – More people indoors means more possessions, and increased likelihood of accidents around the home. If people move in with you, you may need to pay more
  • The location of your home – Insurers can tell a lot just from your postcode. If you live in an area which is more prone to flooding or has higher levels of theft crime, this could affect the cost of your cover
  • How many children and pets you have – The likelihood of a claim increases the more children and pets you have at home. Younger families or those with pets are more likely to claim for things like accidental damage
  • How long you are away from your home – If your home is vacant for a certain number of days a year, you might not be able to get cover.
  • The value of your contents – Generally, the more valuable the items you own and want covered, the more you are likely to pay
  • Any past claims – If the number of claims goes up the cost to insure your home could go up. This might be due to extreme weather or accidental damage claims.  A change to any of these might affect what you pay.

Your home

Naturally, your home has a big impact on your premium. So you should keep the factors below in mind.

Where you live

Some places are prone to flooding, subsidence or might have higher crime and vandalism rates. While more affluent postcodes often draw higher premiums. It might be a good idea to research your area before buying and insuring a home. This is so you are aware of potential risks and can tailor your home insurance cover.

Floods 

The likelihood of being caught up in a flood will impact the pricing of your premium. The government website can help you determine the risk of floods occurring in your area. 

You can see the flooding history of a property in England. This way, you’ll know if the home you wish to buy or insure has a history of flooding.

Or you can check the long term flood risk for an area in England. This may be especially useful if you live nearer the coast or a body of water.

You can also request the Environment Agency’s flood maps for England and Wales.

Crime

Insurers will look at the crime rates where you live to work out your premium price.

The police publish the latest crime data for your area online, so you can see the types of crimes being reported and what’s being done to tackle them.

Size of your home

The size of your property is taken into account. The more rooms in your property, the more it could cost to insure. Typically, larger homes will also have more possessions and higher repair costs. 

The property type also presents different risk levels. For example, whether your house is detached, semi-detached or terraced has a bearing on your home insurance cover.

Age of your home

As properties age, things may start to go wrong. From leaks to faulty wiring. It can be more costly to rebuild or repair older homes. Which is why the insurance costs are usually higher.

Building Cost Information Service (BCIS) have a useful tool to calculate the rebuild costs of your home.

What your home is built with

Homes made with fire-proof materials, like brick, tend to save more on their premiums. Those with timber frames or thatched roofs are more at risk of catching fire. 

Pay attention to the materials your home is built with. Maybe even refer to an itinerary and make a note of it.

Where your home is located

It’s important to check the location of your home before you buy or insure. The closer you are to a body of water, the more it usually is to insure due to a higher risk of flooding.

Flood insurance is included under your regular buildings insurance. And personal items are covered under your contents insurance, but you should double check what will and won’t be covered if floods occur.

You and your family

You and your family’s personal situation are also taken into consideration. This can include your age to the amount of time you spend away from home.

Your lifestyle

Your age is key when working out your premium. Typically, older people tend to claim less than younger families or those with pets. New additions often mean an increase in possessions which may need to be covered. There’s also the potential for unexpected accidents and damage to occur. Let us know when anyone decides to move out so you always have the right cover. 

How long you're away from home

If you tend to spend longer away from your home, then this could increase your premium due to a higher security risk.

Many insurers will also ask how secure your property is, including the type of locks you have fitted.

You may also want to make use of smart technology to keep an eye on your property. Make sure your home is as secure as it can be to potentially reduce your premium price. Our guide to securing your home could help.

Value of your contents

The value of the contents you want to insure impacts your home insurance premium. These include furniture, carpets, laptops, and clothing. If your contents are higher in value, you are likely to pay more.

It’s important you have the right level of cover, so check our useful guide about how to calculate your contents.

Previous claims

Your claims history is factored in too. As you would expect, people with fewer or no claims tend to pay less. 

If you have made a claim in the past few years, you may end up paying more for your cover. This might not happen right away but on your renewal date.

Handy take aways

With all these factors in mind, you should try to make sure you have the right cover in place for you. Consider your personal circumstances, location and property details before buying or insuring a home. These are things that insurers will look at.

There are plenty of online tools, some listed in this guide, to help you. Whether you are looking to calculate the rebuild cost of your home, generate the value of your home contents, or assess potential flood risks. Try to make use of these where possible.

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