Why do home insurance premiums go up each year?

Insurance is all about risk, so insurance providers constantly analyse and assess every single thing they can to evaluate this risk.

That's why it's so important to keep your details as up to date as possible, which you can do at your MySaga account. This also means that when we send you a renewal or give you a quote, we can give you the best price we can.

Let's take a look at some of the obvious and not-so-obvious aspects your insurance underwriter takes into account when coming up with your premium.

Any changes to your circumstances or home situation can have an affect on the price you pay. Here are some examples:

Change of address

If you've moved house, whether to the next postcode or the next county, many factors can change. Crime rates and the number of claims per household, as well as the house type, can all adjust your price.

Changes to your property

If you've added an extension or converted and increased your number of bedrooms, this can change your property value or its rebuild costs. In turn this could affect how much you pay for your insurance.

How busy your home is

Changing from full-time employment to part-time or retired means you are at home more. On the plus side, there's less chance of break-ins, but the downside is that there's more opportunity to damage things!

Changing circumstances in the wider world

There are other influences on the cost of your home insurance that are not a result of anything you’ve done personally. From nationwide and regional statistics to the state of the economy, these external factors all contribute to changes in your price:

• Insurance Premium Tax (IPT): Your home insurance is subject to Insurance Premium Tax, which has doubled to 12% since 2015 and can change with every government budget.
• Local statistics: Newly published data can affect the cost of your home insurance. This might be public information about reported crime figures or industry research about the number of claims made in your neighbourhood.
• Widespread inflation: Repairing damaged homes is becoming more expensive as houses and their contents are now much higher spec. Plus, labour costs to rebuild and refit homes have to be factored in.
• Regional geography: If other properties in your area are prone to flooding or subsidence, yours might fall under the same catchment area or be regarded as a similar risk.
• Operating costs: Insurance businesses have overheads so, naturally, each policy contributes to that. Any increases in the cost of energy consumption, staff wages or operating systems may also affect the cost of your insurance.