What affects insurance premiums
Homeowners in the UK may have noticed that their home insurance premiums have increased. There are various factors that can impact the cost of insurance policies, including environmental, geographical, inflation and personal information. We look at what affects insurance premiums and why you should check that you have an adequate level of cover.
Bad weather and rising inflation
Last year, the rise in home insurance premiums was partly due to inflation, as well as rising material and labour costs. But it’s also in response to an increased number of claims. Weather-related insurance claims can push up the price of premiums, especially if a property is located in a flood area.
According to the Association of British Insurers (ABI), between January – September 2024, insurers paid out a total of £5.7bn in property-related claims. This is the highest amount to have ever been paid out and was reportedly due to adverse weather conditions caused by climate change. In the third quarter of 2024, damage to homes from storms, heavy rain and frozen pipes cost £136m in claims, which is 6% higher than in 2023.
This record-breaking payout for UK insurance claims occurred due to 2024 being an unusually severe weather year. Although so far in 2025 we’ve been treated to sunny skies, last year there were 12 named storms. This is the highest number since the winter of 2015/16. Claims from storms, wind, flooding and frozen pipes overtook the previous record set in 2022 by £77m. Last year, claim payouts were £127m higher than in 2023.
In the last three months of 2024, home insurance claims due to bad weather reached £146m, which is the seventh consecutive quarter above £100m. Businesses were also badly hit, claiming £102m for interruptions and storm damage, which is also a rise from previous periods. With extreme weather conditions becoming more common, these figures highlight the importance of homeowners and businesses having a suitable level of cover in place.
Other factors that affect the cost of insurance
Insurance premiums are affected by a variety of external factors, many of which are beyond our control. Many people are surprised when they move to a different postcode and see price changes to their home or car insurance. Premiums can be based on crime rates in geographical areas, which means your policies could increase or decrease when you move house.
Depending on the type of insurance policy, factors such as your credit rating, age, health, occupation and claims history can also impact costs. When did you last check your insurance policies? Do you have an adequate level of cover for your home and income?
At Bubble Finance Hub, our insurance advisers can advise on home insurance, life insurance, critical illness, income protection and other policies. Our experienced team will check your existing cover and, if necessary, we will find the right policy for your needs. We always aim to find a suitable level of cover for our clients at an affordable cost.
If you would like us to check an existing insurance policy, get in touch to book an appointment and discuss your options.
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