Home insurance costs pushed up by extreme weather

What's happening to home insurance costs?

According to Halifax Home Insurance, subsidence claims have consistently risen in line with extreme weather trends over the past 12 months.

Throughout 2022 the insurer was inundated with around 45% more claims than in 2021, receiving triple the monthly average in both August and September last year.

Highlighting just how much damage extreme weather is causing in the UK, one case saw Halifax pay out more than £365,000 just for repairs in the last 12 months.

It has also been reported that out of 23,000 subsidence claims submitted in 2022, 18,000 of them followed the summer heatwave in the second half of the year.

Fast forward to the first quarter of 2023 and the price for combined home buildings and contents insurance was up 6% on the same time in 2022, costing homeowners around £315 on average according to the Association of British Insurers (ABI).

However, despite the increasing costs, homeowners and experts alike have suggested it’s well worth paying as figures show the typical claim for storm damage is around £3,108 for building insurance and £3,334 for contents insurance.

Why has the cost of home insurance increased?

Did you have a hosepipe ban in your region this year? Excessive bouts of dry weather are just one of the major causes for the rise in number of subsidence claims.

Properties built on clay-rich grounds are the worst affected when the country is hit with a drought, as trees and bushes absorb any remaining moisture from the soil. This can result in major structural issues, causing the house’s foundation to shrink and crack.

According to the ABI, they are anticipating to make a pay out bigger than 2006’s bill, at a cost of around £219m for subsidence claims due to drought.

However, it’s not just drought that is causing homeowners problems. Storms Dudley, Eunice, and Franklin hit homes in February 2022 which resulted in 170,000 claims of property damage.

Furthermore, the cold snap in December led to a rapid increase in the number of claims made concerning burst pipes.

As temperatures continue to rise across the globe, for us in the UK, this is causing unpredictable and extreme weather phenomena, such as wildfires and flooding, to become a more common occurrence.

This is due to climate change. Not only is it affecting our environment, but it’s now affecting our homes too.

Other areas of concern

It’s not just issues outside of the home that are concerning homeowners either. The number of content policies taken out has also increased, according to Tesco Bank who recorded a new level of claims made regarding broken freezers during June’s heatwave this year. The heatwave also caused compressors to give out after working overtime.

The ABI has said it cannot predict what impact climate change will have on insurance premiums in the future but believes insurance policies will become increasingly more important as the cost of living and climate crisis continues to persist.

Each year the Met Office continues to report on record-breaking temperatures, storms, and other weather phenomena that is consistently outweighing the previous years’ record, a daunting reminder of how important it is to ensure your home is properly insured in case the worst happens.

What do we suggest?

Purchasing a home is one of the most significant investments you may ever make in your life, and it’s safe to say that it’s no cheap feat either. So, once you have your home, you’d do anything to protect it, right?

A small, one-off payment for a Reinstatement Cost Assessment (RCA) could save you thousands and ensure your property is properly protected in case the worst was ever to happen.

Also known as a Rebuilding Cost Assessment or a Replacement Cost Assessment, an RCA is an evaluation of your property that calculates the cost of replacing your contents and rebuilding your property in the event of a loss, such as a fire, natural disaster, or other unforeseen circumstance.

It’s important for homeowners to have as this will ensure you are not overpaying or underpaying for your insurance.

If your home is underinsured, you might not receive enough compensation from your insurance provider.

Alternatively, overestimating the cost could lead to unnecessarily high insurance premiums. A precise assessment strikes the right balance, protecting your investment without breaking the bank. This type of property assessment can only be undertaken by a Chartered Building Surveyor.

However, if you’re certain that your home is adequately insured or if you are seeking peace of mind, a Level 2 or a Level 3 Building Survey will also help battle the elements and allow you to budget for any weather-related damages down the line.

For more information on our Level 2 and Level 3 Building Surveys you can read our article in the Advice Hub here. For more details on Reinstatement Cost Assessments for your home click here.

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