Why Are Home Insurance Premiums Going Up? 

Why are claim costs still rising if premiums are falling?

Because insurers are paying out more per claim than ever before, even as they compete harder on price to retain customers. The average household claim in Q1 2026 reached £6,340, a 20% increase on the same period in 2025 and the highest on record, according to the ABI. The average weather-related damage claim in the same quarter hit £6,040, up 38% year-on-year.

Three structural factors are driving that claims inflation, and none of them are temporary.

1. Extreme weather is no longer exceptional

Storm Eowyn in early 2026 was the UK’s most powerful windstorm in over a decade according to the Met Office. UK insurers paid out £1.2 billion in weather-related property claims across 2025, a 14% increase on 2024. Average flood payouts to homeowners reached £30,000 in 2025, up 60% on the previous year. Subsidence claims are rising too, the ABI’s Q1 2026 data puts the average subsidence settlement at £17,820, up 9% year-on-year, following the driest summer on record in 2025.

2. Rebuild costs remain structurally elevated

The Building Cost Information Service (BCIS), which calculates the House Rebuilding Cost Index for the ABI, reported an average uplift of 3.8% in residential rebuild costs in the year to January 2025. The House Rebuilding Cost Index was 40% higher in January 2024 than it was in January 2020. Labour costs are now the bigger driver: earnings in the construction sector have outpaced the wider economy, compounded by employers’ National Insurance increases and persistent skills shortages.

The practical consequence is that policies index-linked using standard rates can be 10 to 15% below the actual cost of reinstatement. Your sum insured may have drifted from reality without either you or your insurer catching it.

3. Insurers are paying out more than they take in

Many UK insurers have been operating at a combined operating ratio above 100%, meaning claims and operating expenses exceed premiums collected. That structural loss drove the sharp price increases of 2023 and 2024. The easing of 2025 and 2026 is welcome, but insurers are still rebuilding profitability, which means any significant new weather event could reverse the downward trend quickly.

Why has my specific renewal gone up if the market average has fallen?

This is the question the average figures cannot answer. Your renewal is not priced against the market average, it is priced against your specific property, your history, and your postcode. There are four common explanations.

• Postcode risk has been repriced. Flood risk mapping is updated regularly. If your area has seen significant weather claims in the last 12 to 18 months, insurers may have repriced that postcode regardless of your individual claims record.
• A claim is on your record. A single claim — particularly for escape of water, subsidence, or storm damage, can trigger a meaningful premium increase at renewal, typically for three to five years.
• Your rebuild sum has not kept pace with costs. If your buildings sum insured is being index-linked but has not been formally reassessed, it may be drifting below the actual rebuild cost. Some insurers price this risk into the renewal.
• Your insurer is managing its book. Insurers exit or reprice certain risk categories without explanation. Non-standard construction, older properties, and properties in specific flood zones are most commonly affected.

According to the Norton Survey of the Year 2026, which surveyed 550 UK homeowners and insurance customers, 29% of respondents were not confident their home insurance would pay out as expected. A renewal that has increased significantly is often a signal that the policy terms, not just the price, warrant closer examination.

What can you do about a higher renewal quote?

Three things are worth doing at every renewal, not just when the quote goes up.

• Check your rebuild sum. The BCIS/ABI House Rebuilding Cost Calculator is free to use. If your buildings sum insured has not been reviewed in the last three to five years, it is worth running the numbers before you renew. Underinsurance at claim time costs considerably more than any premium saving made by letting the sum drift.
• Shop the market, but compare like for like. Comparison sites show quoted prices, not paid prices, and they frequently exclude non-standard properties entirely. If your home is listed, thatched, in a flood zone, or has any non-standard construction, the comparison site result is not a reliable benchmark.
• Review what you are actually covered for. A renewal price that has dropped may reflect reduced cover, a higher excess, or the removal of an add-on. Read the policy schedule, not just the premium figure.

What this means at your next renewal

The market average has softened. Your individual position depends on factors the market average cannot capture, your postcode, your claims history, your rebuild sum, and your insurer’s appetite for your specific risk. If your renewal has gone up materially, the cause is usually one of those four factors, and a broker can identify which one.

You can also read our guide to how to value your home contents properly and our overview of home insurance versus buildings insurance if you are reassessing your cover from scratch. If your renewal has increased and you are not sure whether it is justified, our team can review the policy terms and the market against your specific property.

As a specialist home insurance broker, we help clients stay ahead of the news and provide protection for their homes. Fill in your details below if you have any home insurance query and our friendly team will get back to you shortly.

This article is informational and does not constitute personalised financial advice