Your home insurance price explained

How do we work out the cost of your home insurance?

To work out the price of your insurance, we weigh up several factors. Some factors are specific to you, including the chances of you making a claim. Other factors are to do with the world around you and what’s happening in the insurance market.

Every customer pays into a central pot, and if you make a claim we pay it out of that pot. If lots of people claim at once, the pot has to go further, which means prices go up. But whatever happens, we constantly review the way we calculate the cost of home insurance so we can make sure we offer you the most accurate price.

On this page, we’ve explained these factors and how they affect your price.

Your home insurance renewal

Before your current policy comes to an end, we’ll send you a renewal invitation ^{Footnote [1]}. It will show two prices – last year’s price and a price for continuing cover for another year.

As you’re already a customer with us, your price to renew your cover will be the same as or lower than the equivalent price for a new customer.

Over the past year, insurance prices have gone up across the UK. Various factors have played a role in this, such as a shortage of parts, materials, and workers, which has led to price increases. This coupled with the European energy crisis has driven up inflation in the UK.

If the specific cover you have with us isn’t available to new customers any more, we’ll compare your renewal price against the new customer price of the policy which most closely matches yours.

Frequently asked questions

Why isn't last year's price what I paid?

I haven’t made any changes, why has my premium changed?

Prices don’t always change because of something you’ve done. For example, the total cost of all claims made during the last year, more expensive repair costs or severe weather could have made your price go up. There are also external factors that might mean your insurance costs more or less, including changes to regulations and inflation.

Insurance regulation changes from January 2022 mean we've had to change the way we calculated our prices. These changes don’t necessarily mean your renewal price will be lower than last year’s price, as other factors could also impact your price, such as those mentioned on this page.

Does this price include my no claim discount?

It does, and the more years you have the more discount it gives you. However, the first few years make the biggest difference to your price – after more than five years the impact levels off.

Once you have five years’ no claim discount, you have the option to protect your no claim discount and reduce the possible impact of a future claim on your next renewal price, and there would be an additional cost for this.

Why have I found a better price from you on a price comparison website?

Why does it cost more to pay monthly for insurance?

We offer our customers the ability to pay for their insurance either annually or monthly.

If you choose to pay monthly, for most of our insurance products, it will be more expensive than paying annually. This is because, essentially, you are taking out a 12-month loan with us. With most loans/credit arrangements an interest rate is applied to the amount borrowed, which will increase the total amount you pay.

We will run a full credit check when we offer you an initial quote. If you go on to take out an insurance policy with us, we will re-run this check for every renewal offered. The interest amount you pay will be variable and may change each year you continue to insure with us and will be calculated based on our view of the risk of lending to you under your credit agreement.

Breakdown of home insurance costs

At a glance, where your money goes.

Claim costs count for the majority of our outlays. Here’s a breakdown of the cost of home-insurance claims

25% Escape of water
25% Fire and theft (including burglaries)
24% Freeze, flooding and storm damage
11% Own damage
15% Other, including subsidence

Cost breakdown based on claims paid out by Aviva in 2022.

How you affect the price of your home insurance

Where you live

Public data on your property’s local area is used to work out customers’ prices. This includes average claims costs and what we expect to happen in your neighbourhood. If claims in your area go up, you may pay more to insure your house.

Any past claims

To work out your price, we consider all the claims you’ve made over the last five years. So no claims in that period might mean you're offered a lower price on your insurance premium.

Your home’s build

Your price may change based on how your property's built. Timber frames, for example, may raise your premiums because of the fire risk. The same goes for unusual building materials that are hard to find or fix.

How events affect your home insurance price

Severe weather

The UK is suffering more floods because of climate change. As the air warms, more moisture is released, which has led to more frequent and heavier flooding. From 2010-2019, the UK had much more rain than it did from 1961 to 1990 ^{Footnote [2]}.We paid out nearly £6.2 million to customers in 2022 as a result of flooding in their homes.

Rising repair costs

The cost of replacing and repairing home appliances like televisions, tablets, and lighting is rising. This is partly because of inflation ^{Footnote [3]} due to energy costs, labour shortages, and global supply chain problems. As a result, insurance premiums become more expensive.

Changing claims market

There was a 400% increase in customers’ calls for frozen and burst pipes in December 2022 ^{Footnote [4]} as households cut back on their energy consumption. If you turn off your central heating during a cold snap, pipes are more likely to freeze and burst when the ice melts. This increases our costs, which then affects your bill. We paid out £18.6 million in 2022 to nearly 5,000 customers who claimed for water escaping in their homes.

Number of claims

Police recorded crime increased by 14% ^{Footnote [5]} in the year ending September 2022. Claims for stolen or damaged items can drive up policy prices, and insurance costs also go up when there's more risk of loss. During 2022, we paid out £74.2 million to 21,462 home insurance customers, up 20% from 2020.

Insurance Premium Tax

Your price includes Insurance Premium Tax (IPT). It’s been charged at 12% since 2017, and we collect the tax from you and pay it directly to the Government. Learn more about IPT.

Other costs

Your premium covers the costs of current services, like having a team to answer your calls, online support, and investing in new technologies to ensure our products remain easy to use for all customers.

How do we work out the cost of your home insurance?