THE IMPACT OF CLIMATE CHANGE ON HOME INSURANCE: ALMOST THREE-QUARTERS OF HOMEOWNERS WHO HAVE MADE A WEATHER-RELATED DAMAGE CLAIM HAVE DONE SO WITHIN THE LAST FIVE YEARS ALONE
- On average, weather-related damage costs almost £3,500 to repair
- More than a fifth (23%) of homeowners have not checked to see whether they live in a high flood-risk area
- Living within 400ft of water increased home insurances premiums by an average of £28 a year
- Nearly eight in ten homeowners (78%) think that climate change will increase the cost of home insurance
2 February 2022 – As a reflection of worsening weather conditions, almost three-quarters of UK homeowners (74%) who have made a weather-related damage claim on their home insurance have done so within the last five years, according to new research by comparethemarket.com.
Storms are one of the most common causes of weather related-damage, experienced by over two-fifths (42%) of claimants and almost a fifth had experienced flood damage (18%). The findings come as scientists warn that extreme weather events in the UK are becoming more common.
According to a report from the Met Office, 2020 was the UK’s third warmest and fifth wettest year on record. The report also found February 2020 was the wettest month ever recorded due to widespread flooding caused by Storms Ciara and Dennis.
Repair bills from storm damage can often run into thousands of pounds, with the average amount of damage costing almost £3,500. Insurance pay outs to help households recover from Storms Ciara and Dennis totalled an estimated £363 million, according to the Association of British Insurers (ABI). 83% of homeowners who made a claim to their insurer in the past five years received a successful pay out.
Having the right home insurance in place can act as protection against the cost of any unexpected damage to a property and its contents, proving vital in the case of emergencies. However, there appears to be a gap in some homeowners' knowledge about their local risk of flooding. More than a fifth (23%) of homeowners have not checked to see whether they live in a high flood-risk area.
According to comparethemarket.com, 16% of those who purchased home insurance in 2021 lived within 400ft of water. In 2021, living within 400ft of water increased home insurance premiums by an average of £28, or 15%, compared to those who lived further away from water.
Mubina Pirmohamed, head of home insurance at comparethemarket.com said:
"We are already seeing the effects of climate change on British weather. Severe weather events can be devastating to homes and damage can cost thousands of pounds to fix. With storms and flooding becoming more frequent, it's a good idea to review your home insurance policy and we would urge homeowners to check if they are living in a flood-risk area”.
Nearly eight in ten homeowners (78%) believe that climate change will increase the cost of home premiums and more than two-thirds (67%) are concerned that climate change will increase the risk of their home flooding. The British Insurance Brokers Association (BIBA) claims that five million UK properties, or one in six, are currently at risk. For more information on storm and weather damage, visit: https://www.comparethemarket.com/home-insurance/weather-storm-damage/.
According to comparethemarket.com data, the average cost of a home insurance policy is £170 per year while the cheapest premium typically costs £145 annually. Homeowners may be able to save money by switching their insurance policy, with average savings reaching £25 in 2021 by switching to the cheapest policy. Similarly, the average premium for homeowners who live within 400ft of water cost £198, yet the cheapest premium cost £163, meaning homeowners could have saved an average of £35 by switching.
|Time||Within 400 ft of water?||Average premium||Cheapest premium||Price difference|
|Jan – Dec 21||NO||£170||£145||£25|
|Jan – Dec 21||YES||£198||£163||£35|
In January 2022, the FCA introduced new regulations that stop insurers from offering discounts exclusively to new customers. While these regulations are designed to stop existing customers from being penalised for loyalty, insurers may choose to increase premiums for new customers. Therefore, it is still a good idea to compare the cost of home insurance before renewing your policy.
Mubina Pirmohamed continued:
“While the majority of home insurance providers cover weather related claims as standard, you might still be able to get better value for money by switching to a new policy or provider, even if you live in an area at risk of flooding. Taking out a home insurance policy can give you peace of mind that you'll be financially protected and supported to make repairs to your home, should the worst ever happen. In the event of your house being uninhabitable and needing to undergo repairs, some insurance policies can help you carry on as normal by giving the option of alternative accommodation."
Notes to Editors
Research was conducted by Censuswide on behalf of comparethemarket.com a total of 2,004 UK homeowners. Polling conducted between 13.01.2022 – 17.01.2022
All other data is sourced from comparethemarket.com.
When the “average price” is referred to, this is the mean average of the top five cheapest prices presented to a customer, where a consumer has clicked through to buy. Buying from the top five cheapest prices presented represents 90% of all home insurance sales. When the “cheapest price” is referred to, this is the average cheapest price presented, where a customer has clicked through to buy.
This press release calculates the cost of premiums where the customer has clicked through to buy the policy. If the average premium cost was instead calculated on the basis of all prices returned then the average cost would be significantly higher.
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