How Much Does Home Insurance Cost?

Learn how home insurance works and what kind of variables add up to form the overall price.

Updated: March 18, 2024
Matt Crabtree

Written By

Matt Crabtree

 

While there are obviously plenty of different types of insurance out there, home insurance is undoubtedly one of the more important ones — up there with things like life insurance or health insurance.

This is basically the best way you're able to protect your house and personal possessions from any kind of unexpected event or damage, but it's not always as simple as signing up with the first home insurance provider you can find and being given a direct quote.

The costs and various kinds of coverage options that are available are almost always going to be different depending on which provider you go to.

As such, it's not exactly easy to provide an all encompassing answer for the total cost of house insurance, but that doesn't mean we can still break down some of the main factors that influence this overall value so that you're able to have a ballpark estimate.

In the United Kingdom, home insurance is generally made up of both buildings insurance and contents insurance, which can either be bought separately or as a combined home insurance policy, so throughout this article, we'll be covering how these expenses, along with any additional add-ons you opt for make up the overall price of home insurance.

Understanding Home Insurance

To kick things off, it's worth walking through what some of the main components of home insurance actually are so you've got a little bit of context before we move on to the specific costs.

Generally speaking, although there are a bunch of different add-ons that we'll come onto later in the article, home insurance primarily comprises two key parts, buildings insurance and contents insurance.

The former is more for the structure of your home, so that includes things like your walls, roof, floors, and any fixtures you might have, like kitchen units and bathroom fittings, whereas contents insurance is for personal belongings like clothing or electronics.

Factors Influencing House Insurance Cost

With this in mind, let's now walk through how each of these adds up to form the overall cost of home insurance, as having an understanding of how these work can definitely work in your favour when you're trying to select the right insurance provider for your particular needs:

1. Property Value and Rebuild Cost

Insurance providers look at how much your house is worth and the associated rebuild costs a fairly decent amount when they're determining your home insurance premium, and this basically just refers to the amount of money it would cost for your home to be completely reconstructed — including things like labour costs and materials.

In particular, they're interested in knowing things about your house, like the size, age, construction type, and location, so that they've got a better idea of the overall rebuild cost.

This might not apply to everyone who is currently reading, but anyone with a house in an area that's prone to natural disasters — such as floodplains or earthquake zones — is probably going to face higher insurance premiums since there's way more risk being taken on by the insurer.

Similarly, this principle works exactly the same way for any properties that are located in urban areas that might have higher crime rates; you'll also receive higher premiums since you're a lot more susceptible to theft or vandalism.

Naturally, this works the other way, also, as any houses in particularly low-risk areas might even benefit from lower insurance costs.

Ultimately, most insurers use a range of different technologies to analyse data on any historical claims, property characteristics, or local risk factors to figure out whether there's a likelihood of future losses or not so they can adjust their premiums accordingly.

2. Contents Value

Moving forward, let's take a look at contents value, as all your personal belongings — from your television to your designer shoes — have a fairly significant influence on your home insurance premiums.

It might sound slightly over the top, but you're going to need to work out the total of all of these personal belongings and tell your insurer about it so that they're able to properly determine how much coverage you need.

It can obviously get a bit tricky when it comes to calculating all of your possessions, especially if this includes things like artwork where the valuation might not exactly be set in stone.

You're still going to need to take inventory as best as possible so that you've got an idea what your contents insurance premiums might look like — including things like their value, quantity, how susceptible or fragile they might be to damage/theft, and if there are any specific items you require additional coverage for.

Fortunately, you're often in luck here since most insurers offer different options that let you adjust what particular items have coverage and what don't.

So, for example, most people probably choose to insure their most high-value items separately or even just opt for extra coverage if there's something in particular that's valuable to you — ultimately, you're going to be able to tailor your contents insurance policy however you like so you can find a balance between protection and cost.

3. Claims History

Hopefully, you've not had to make any major, or at least frequent, claims on your home insurance policy in the past, as your prior claims history actually serves as one of the main ways insurers assess your risk profile.

Checking things like any previous insurance claims you've had to make, how frequent they were, and the severity so they can gauge whether you're likely to repeat the same kind of behaviour with them.

It should go without saying that if you've got a fairly bad history of frequent or generally significant claims, you're going to scream danger to any insurers, resulting in much higher insurance premiums.

Obviously, this works inversely, too, as a track record of responsible behaviour — meaning you've not been making excessive amounts of claims — means you'll have a lower risk profile and, subsequently, lower premiums.

It's always going to take a knock on your creditworthiness and risk profile when you make insurance claims, so you've got to be careful and consider what long term impacts might be made on your premiums if you continue to do so — even if you receive short term financial protection in the event of an unexpected loss.

As a general rule of thumb, it's always best just to think of your insurance as an absolute last resort for covering significant losses — try to handle minor repairs or replacements out of pocket if you can.

4. Accidental Damage Cover

You're naturally never able to predict when something like a spillage or breakage is going to happen, so most people opt for some kind of accidental damage cover to stay protected against these sorts of things.

Just keep in mind that you're usually going to get higher insurance premiums if you include accidental damage cover since there's increased risk exposure on behalf of your insurers.

As such, if this is something you feel like you can live without, it's possibly worth excluding accidental damage cover from your home insurance policy if you're looking to do things on a budget and have weighed the potential benefits against the additional cost.

Still, if you're someone with young children or even pets, you're probably a bit more susceptible to accidental damage in your house than the average person, so this kind of cover can definitely provide some much needed protection against all of the everyday mishaps and accidents that come with raising a kid.

The same goes for anyone with high-value possessions or delicate belongings, too, as although this should probably be covered in your contents insurance plan, it should guarantee you've got the right amount of coverage for them in case they're accidentally damaged.

5. Security Measures

Generally speaking, any kind of additional security measures you have installed at your property — whether it's on the inside or outside — tends to actually have pretty positive impacts on your home insurance premiums, as insurers naturally feel a little bit more at ease now the threat of vandalism is at least slightly reduced.

As a result, they might even offer you a few different incentives or discounts, so let's walk through some of the different security measures you can implement in your home that can help lower your insurance premiums:

Burglar Alarms

You'll get bonus points if it's professionally monitored, but installing a burglar alarm can naturally help deter any possible intruders and reduce your overall risk of being burgled, and the result is often lower insurance premiums.

Deadbolt Locks

Furthermore, rather than using the standard, often fairly insufficient, locks that come with most newbuild houses in the United Kingdom, upgrading to a high-quality deadbolt lock on both your windows and your doors is a huge way of not only enhancing security but also helping your chances of qualifying for insurance discounts, too.

CCTV Cameras

Installing closed-circuit television (CCTV) cameras inside of your house is probably a little bit overkill — not to mention massively expensive — but installing a camera or two at strategically placed locations can be helpful for providing you with visual surveillance of your property.

Aside from this, few things deter criminal activity better than a highly visible security camera, so this only helps reduce your insurance premiums as you'll be perceived as a much safer client.

In fact, this can also be one of the best ways to get around paying higher insurance premiums if you lived in a dangerous neighbourhood, as they'd be far higher if your house was otherwise relatively vulnerable to robbery attempts or vandalism.

Security Lighting

Finally, similarly to security cameras, placing motion-activated security lighting all around the outside of your home to light up any dark areas that would otherwise aid access for an intruder is yet another way insurance providers perceive your house as being safer (and therefore resulting in lower premiums).

Finding Affordable Home Insurance

Despite how frustrating it is to fork out cash for any kind of insurance, home insurance is obviously a necessary expense.

Still, that doesn't mean that there aren't still some tactics you can explore that'll help reduce at least some cost:

Compare Quotes

Given that you're not exactly short of choice when it comes to home insurance providers out there advertising their services, one of the most effective ways you'll be able to find cheaper home insurance is naturally just by shopping around and comparing quotes from multiple different options.

While this kind of thing would be pretty painstakingly long to do by yourself, there is actually a range of different online comparison tools and websites you can use nowadays to help you obtain a fairly accurate quote — all you need to do is input a few different details and preferences, such as your coverage limits and deductible amounts, and you can get quotes from a few different insurers within just a couple of minutes.

Still, when you're actually comparing quotes, try to keep in mind not only the premium and if you're going to be able to afford it but also the quality of the coverage that's being provided.

Policies with lower premiums are obviously going to offer slightly less comprehensive coverage — either that or higher deductibles — and this is going to end up costing you a lot more in the long run if you need to make a claim for any reason.

So, try to take your time here and review all the policy details as carefully as possible beforehand so you can ensure they definitely align with your specific needs; the last thing you'd want to do is get into an agreement with an insurance provider, and you discover how bad the terms are, yet it's incredibly expensive to buy yourself out of the contract.

Consider a Combined Policy

Generally speaking, it can be a lot cheaper to opt for a combined buildings and contents insurance policy from the same insurer rather than going to two separate providers, as insurance providers tend to offer discounts for bundling both of them together.

Furthermore, aside from the more obvious benefits of saving money, combined policies are generally just a lot more convenient since they streamline your insurance coverage under a single provider. As a result, your claims process will be a lot smoother and consistent across both your property's structure and its contents since you've got the same provider for both.

Still, before you fully commit to a combined policy, it's still worth comparing quotes for separate buildings and contents insurance policies so you can double check whether it'll actually be cheaper to bundle them together or not, as sometimes it can still be cheaper to purchase separate policies from different insurers.

Maintain a Good Claims History

As we touched on earlier in the article, keeping a fairly solid record when it comes to your claims history is paramount for keeping your home insurance costs down, so while it's obviously essential to file claims when necessary to recover from unexpected damages, always deal with minor things out of your own pocket if the cost is relatively low.

By avoiding small claims, you can prevent potential premium increases and preserve your claims-free status, which may qualify you for discounts or preferred rates with insurers.

If you do need to make a claim, though, try to work closely with your insurance provider so you can ensure the process goes smoothly and efficiently. This means providing them with accurate documentation and information to support your claim, as well as following any instructions or requirements they've given you.

Related Guides:

How Much Does Home Insurance Cost: FAQs

What Steps Should I Take If I Want to Adjust My Home Insurance Coverage?

Can I Cancel or Switch My Home Insurance Cover Mid-Term?

Can My Home Insurance Premiums Increase If I Make Improvements or Renovations to My Property?

What Should I Do If I Encounter Difficulties With My Home Insurance Claim or Policy?

What Factors Should I Consider When Determining the Level of Contents Insurance Coverage That I Actually Need?

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