Your home insurance renewal explained

Why are prices higher than last year?

Prices for home insurance are increasing because UK insurers are seeing a lot more claims due to an increase in the frequency and severity of weather events. On top of this, because of inflation, the claims are now costing more.

The premiums of the many have always paid for the claims of the few so this impacts everyone, even if you haven’t claimed.

Did you know? Storms Dudley, Eunice, and Franklin led insurers to deal with 170,000 claims for property damage, paying out £473 million to support affected customers. (ABI)

But what’s driving these increases and what are we doing at LV= to tackle these changes?

It’s really important to us that we continue to put you first and give you the same great service you’ve come to expect.

We want to reassure you that we continue to assess the value of our cover, and an increase in premiums is not something we take lightly.

What are some of the reasons for rising home insurance costs?

Building materials: Inflation, high demand, and global supply chain issues saw the cost of materials increase by over 30% from 2020 to 2023 (source: Consumer Price Index).
Replacing belongings: As the cost to buy things like mobile devices, video games, wooden floors and sofas increases, so does the cost to replace them.
Property value: Buildings claim costs have increased due to house prices rising by 22% since 2019 (source: ONS).
Weather events: UK insurers are seeing a lot more claims due to an increase in the frequency and severity of events like storms, floods, subsidence, fires & burst pipes.
2022 was one of the worst years on record: Home insurers paid out £2.5 bn to help customers cope with severe weather events (source: ABI). Our pricing has to factor in how likely it is to happen again and how much claims would cost.

We use the vast majority of your premium doing what we do best, looking after our customers in their time of need. 84% of all LV= home premiums went towards paying for people's claims. We're incredibly proud of this and it's something we'll continue.
Based on 2022 LV= data

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What are we doing about it?

We know it’s hard to keep up with the cost of living at the moment and these challenges affect everyone

At LV= we’re doing everything we can to tackle these challenges...

Maintaining quality while controlling costs: We’re working with our suppliers to source key materials and tackle shortages in a more cost-effective way. For example, by getting sustainable timber closer to home, we’re reducing our transport costs.
Tackling delays: We’re bringing in specialist resource (like subsidence experts) to resolve claims quicker and control external costs.
Expert knowledge: We’re introducing contractors who work only on LV= claims, to improve efficiency and for a better customer experience.

Renewal premiums

Existing LV= Home customer? When your renewal's generated, we’ll compare your quote to a new customer's price for a like-for-like policy to make sure you’re paying the best price we can offer.

Why is my price different to last year?

If your quote's different to last year you might be wondering why, especially if you’ve not made a claim. Even if you’ve not moved house, bought a new car or changed your cover level over the last year, your property or vehicle is a year older now which makes a difference to your quote. Here are a few more things to consider…

The number of claims being made

We settle thousands of home insurance claims every month. If the number goes up, due to things like accidental damage or extreme weather events, this could mean your insurance goes up too.

Severe weather

Long periods of cold weather or rain can cause damage to homes and increase claims for things like burst pipes. When we calculate your price, we look at the likelihood of severe weather conditions and how many of our customers may be affected.

Where you live

The area you live in affects the cost of your home insurance. Typically, if your home's in an area prone to flooding, you may be more likely to make a claim and your price will reflect this. It's the same if you live somewhere with high levels of theft.

Cost of repair and labour

From TVs to tablets and kitchens to lighting, your fixtures, fittings and belongings are becoming more expensive to replace. Rising labour costs are also making it more expensive to fix these items, which can increase the cost of providing your insurance.

The type of building you live in

We assess detached, semi-detached and terraced houses differently, just as we do flats and other types of homes. We also take the size of your property into account - the more rooms and bedrooms, the higher the cost will be to re-build your home or replace your belongings.

Got a question? We might have answered it here...

How do I know my renewal price is the same or cheaper than a new customer?

Could I get a cheaper price at renewal?

Getting a cheaper quote could be due to a variety of things. Usually, it’s because the cover level or add-ons you’ve selected are slightly different. When we work out your renewal, we use all the same details you gave us when you set up your policy (plus any changes you’ve told us about). If you do get a cheaper new quote with us for the exact same cover you currently have, then please call us and we’ll amend your renewal quote.

From time to time, your renewal price may be cheaper than the price we’d give you as a new customer to reflect our view of changing risk. The regulation states that your renewal price must be the same or cheaper than the equivalent new price.

At renewal we’ll update your details to reflect the changes we know of, such as your car and its drivers being another year older. We’ll then calculate your price using these details.

Details include:

Amount of cover:
This includes your excess amount and any additional extras you’ve bought (such as breakdown cover, or legal expenses). When you get a quote on a price comparison website, these details aren’t always included – this is one of the reasons a new quote can appear cheaper than your renewal.
Timings:
Insurance prices can change frequently. This means that between your renewal price being calculated (30 days before your renewal date) and your renewal date itself, there may be changes to our prices. This could be due to inflation, the cost of claims, or a change to our view of the risk being insured. If prices go up after you’ve received your renewal quote, we’ll always honour your renewal price - as long as you renew before the expiry date.
Personal details:
We’ll calculate your renewal based on the information we already know about you, this includes the names, address, vehicle or home on your policy. If any of your details have changed or if we ask for additional information for a new quote that we didn't ask you when you took out your policy, this could result in a different price on the price comparison sites.
How you set up your policy:
We’ll take into account how you first bought your policy and how you set up your policy. So, depending on whether you bought your policy online or through our call centre, your price may be different.

I’ve had a renewal price, why have I been declined a new quote?

What legislation and regulations are in place?

From 1 January 2022, all insurers are adhering to a new pricing regulation set out by the Financial Conduct Authority (FCA). All insurers will make sure that existing customers never pay more than a new Car or Home customer for a like for like policy.

There's also the personal injury discount rate - or Ogden discount rate - which was announced in February 2017. This legislation means insurers now have to pay out bigger lump sums for personal injury claims. This has meant an increase in annual premiums.

Changes in taxation imposed by the government can also affect your price: Insurance Premium Tax (IPT) is a tax on general insurance premiums and has increased incrementally since it was introduced.

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