Where home insurance has been hiked the most: Costs are forecast to keep rising after the storms, but do you live where they are rising steeply already?
- Home insurance premiums have risen by an average 2.9 per cent across the UK
- In the South East the cost of home insurance has gone up by 4.7 per cent
- This figure could rise following this year’s particularly active storm season
Home insurance premiums have climbed over the past year and could rise significantly more following months of storms.
Analysis from research firm Consumer Intelligence found an average 2.9 per cent hike in home insurance premiums, but some areas of the UK saw price rises of nearly 5 per cent over the course of the last year.
And experts warn this figure is only set to rise as insurers begin to factor in the costs of paying out for damages caused by this year’s particularly active storm season.
The UK has experienced weeks of downpours and flooding thanks to storms Ciara, Dennis, Jorge and other bad weather.
On average premiums have gone up by 2.9 per cent according to Consumer Intelligence
Between them, these storms could have caused damage which would result in up to £425million in insurance claims, according to experts at PwC.
At the time of writing there were still currently 94 flood warnings in force in England, including one severe warning, and 196 flood alerts.
Wales has 14 flood warnings and 39 alerts, while Scotland has just one warning in place.
Areas in the North and Midlands have been particularly badly hit, with Yorkshire, Herefordshire, Lincolnshire and Shropshire experiencing some of the worst flooding.
But over the past year it’s the South East that has seen the biggest rise in home insurance premiums.
Premiums in the region have risen faster than any other part of the UK, now standing at 4.7 per cent more expensive than one year ago.
By contrast some of the areas worst-hit in recent weeks such as Wales and Yorkshire have seen premiums rise by just 0.6 per cent and 1.5 per cent respectively over the course of the year.
Will the price of insurance rise in affected areas?
Unsurprisingly, the type of cover that protects you in flooding events is called flood insurance, and it’s normally included as part of your buildings insurance.
| Region | Change in year to January | Average premium (five cheapest) |
|---|---|---|
| South East | 4.70% | £153 |
| Eastern | 4.50% | £151 |
| Scotland | 4.00% | £142 |
| London | 3.90% | £195 |
| North West | 3.10% | £145 |
| South West | 3.00% | £138 |
| West Midlands | 3.00% | £136 |
| East Midlands | 2.60% | £141 |
| North East | 1.90% | £129 |
| Yorkshire and The Humber | 1.50% | £144 |
| Wales | 0.60% | £146 |
| National average | 2.90% | £149 |
| The cheapest premiums were calculated by comparing the prices offered for 2,100 people by all the major Price Comparison Sites and key direct insurers. | ||
It covers things like removing debris, drying out your home, and restoring fittings and fixtures – essentially any damage to the home itself.
After years in which homeowners who had been flooded became increasingly unable to secure cover, official steps were taken to improve flood insurance.
The government backed ‘Flood Re’ scheme allows insurers to offer this element of home insurance at a fixed premium.
Flood Re is a reinsurance company – a sort of insurer for insurers.
It was set up to encourage insurance companies to cover homes in flood-prone areas at a reasonable price by providing them with a pot of money to draw from when things go wrong.
This means that it’s unlikely flood insurance will get more expensive even in areas that have been hit by flooding.
Mohammad Khan, general insurance lead and partner at PwC said: ‘Due to the existence of Flood Re, homeowners who have seen their properties flooded will not necessarily see an increase in the flood element of their premiums on renewal, following the recent storms and current weather.
‘Flood Re charges a fixed premium for the flood element of home insurance for properties built in 2009 and prior.
‘These homes will not necessarily see an increase in premiums on renewal due to the storms and floods if the insurers used Flood Re for those properties.’
However, damage from the storms that wasn’t caused by floods will now be costing insurers money, meaning it will likely have an affect on future premiums.
The above map shows the worst-affected areas hit by storms Dennis and Ciara
A spokesman for the Association of British Insurers said: ‘It is too early to speculate on any impact on premiums from the recent bad weather – weather that insurers expect to have to deal with during the year.
‘The industry funded Flood Re scheme is ensuring that homeowners at high flood risk can continue to get affordable flood insurance. So far 250,000 households in flood risk areas have benefitted from the Scheme.
‘The cost of home insurance remains very competitive. Our Premium Tracker, which shows what people are actually paying for their insurance, highlights that the cost of buildings cover fell last year, with the price of the average home contents policy at its lowest since we started collecting this data back in 2012.’