Average cost of home insurance payout has surged by 64% – ABI

The average cost of a home insurance payout has surged by 64% annually, according to an industry body.

In the year to September 30, the average sum paid out by home insurers was £4,096 – a 64% increase on the average cost of £2,491 for a claim in the previous year – the Association of British Insurers (ABI) said.

The average cost of a flood claim has increased by 53% over the same period, from £11,018 to £16,905.

The cost of putting a subsidence claim right has also jumped over the same timeframe, from £9,042 to £11,515 – a 27% annual increase.

In total, across the year ending September 30, home insurers paid out £832 million, up by 17% on the £713 million paid over the same period the previous year.

The general increase in the cost of living has had an impact on the costs borne by insurers, with higher prices of raw materials, energy, fuel and labour playing a part.

Shortages of both materials and labour have also been a factor.

On top of this, extreme temperatures have triggered claims, with a surge in subsidence claims being seen by insurers following hot summer weather as well as a spate of burst pipe claims following last winter’s cold snap.

Louise Clark, the ABI’s property insurance policy adviser, said: “As well as being the roof over our heads, the home is for most people their biggest asset, so it is vital that it is protected against unwanted, expensive and distressing events.

“From extreme weather, to fire to burglary, insurers continue to support their customers should the worst happen.”

The figures do not include claims for Storms Babet, Ciaran and Debi, which the ABI recently estimated will lead to £560 million in payouts for damaged homes, businesses and vehicles.

The ABI’s property insurance premium tracker, which is based on the prices customers actually pay for their cover rather than quotes, indicates that, in the third quarter of this year, the average price paid for a combined home buildings and contents policy was £350.

This is a 15% or £46 increase, compared with the third quarter of 2022.

The average cost of a contents policy, at £126, rose by 10% annually.

The average price paid for buildings-only insurance was £273, a 19% increase on the same period last year. This in part reflected increases in the costs of building materials, the ABI said.