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Why has the cost of Insurance gone up so much? My 2023 Insurance Renewals are really expensive.

If you have just received details of your UK Car Insurance renewal costs, you may have had a bit of a shock when you saw the price. Similarly, UK Home, Contents and Building Insurance renewals may also have you wondering “Why is my Insurance suddenly so much more expensive?”

It’s not just you: Car and Home Insurance has got more expensive

Firstly, rest assured that it’s not just you. Holders of Car Insurance and Home Insurance policies across the UK are all wondering the same thing – costs have increased, in some cases very dramatically, and understanding why might help you to feel a little more in control.

Secondly, looking at the best way to manage the costs of your UK Insurance policies might be helpful – although the trend in costs might be up, you can still do your bit to find the best deal for your particular needs.

Why have Car Insurance Premiums increased so much?

You don’t need us to tell you that the cost of most things has increased over the last 12 months. We faced challenging rises in energy costs at home, and motorists struggled to cover the increasing fuel costs at the pumps. Food prices went up. Things got more expensive. And so perhaps we shouldn’t be surprised that our Car Insurance has gone up too… but why so much?

Rising Costs to Repair Cars mean Rising Costs to Insure Cars

Inflation – increasing prices – doesn’t impact all things at the same time and the same rate. So whilst some may now see fuel prices, for example, levelling off, other sectors of the economy, other goods and services, are still seeing prices rise. This is true for lots of the goods and services that your Car Insurance provider has to pay for when you make a claim. Car Insurance companies need to balance the likely costs of the customers’ claims, with the amount they charge those customers in premiums. So if the cost to deal with every claim goes up, the price of every premium needs to go up too.

For example, shortages and supply issues that began during the Covid pandemic are still impacting the motor sector. If you need to claim on your Car Insurance for a repair, and your car needs a spare part, and that spare part is now harder to get and more expensive to buy – then the price that your Insurance Company has to pay for that repair is greater too.

It’s not just spare parts that are driving up costs. Like all business, garages are facing increased costs for energy, materials and wages. They need to cover these price rises – so they charge the Insurance Company more to work on a car. The Insurance Company needs to cover that increase – so, just as you suspected, they increase the amount they charge their customers. And that’s why you see such an unexpectedly large increase in your Car Insurance Renewal Quote.

If all Car Insurance has gone up, should I just accept my renewal quote?

You could do that, but, unless you really don’t mind how much you pay, review some alternative Car Insurance quotes first to find the insurance you need at the best possible price.

Although UK Car Insurance has become more expensive, not all UK Car Insurance providers will have increased their costs for customers in the same way. Your personal circumstances play a big part in how much your particular Car Insurance policy will cost, and some providers will charge less for drivers like you, whilst some will charge more. The only way to understand whether your renewal quote represents good value is to compare it with quotes from other providers. This process doesn’t have to take forever – visit our Car Insurance page to get quotes from lots of leading providers with just one easy form. All the quotes will be based on the same information from the one form, so you’ll know that you are comparing like with like.

Review before you Renew

Compare the cost of your renewal against quotes from other leading providers. One form, lots of UK Car Insurance quotes to compare.

Why is Home Insurance so much more expensive this year?

Car Insurance is not the only UK Insurance product to have seen dramatic price rises. UK Home Insurance, Building Insurance and Contents Insurance customers have also seen significant year-on-year increases in their renewal quotes and premiums.

What has made Home Insurance cost more in 2023?

In much the same way as Car Insurance, Home Insurance premiums have gone up because the costs that Insurance Providers have to cover have also increased. Some of the factors are the same as for Car Insurance price increases, whilst other issues have led to more Home Insurance claims being made in 2022 – leaving Insurance Providers needing to charge more to all customers in 2023 to cover the costs of those additional claims.

Home and Building Work now costs More

Just as angry shortages, price inflation, transportation delays, part shortages and raw material costs have made it more expensive for a car to be repaired, these factors have also made it more expensive for an insurance company to cover the cost of a claim requiring repair to your home. The more expensive claims become for Insurance Providers to cover, the more they will need to charge each customer to make their business balance.

Examples? Certainly. The cost of energy and some fuels has dramatically increased – we are all feeling this. So energy-intensive, fuel-hungry activities cost more money to undertake – for example the manufacture of bricks, the delivery of cement or the production of plasterboard. If these things cost more to do, then producers and suppliers will charge more. The Insurance Company covering your claim to rebuild after damage to your home pays those increased charges. Now they need to cover that rising cost to their business – which they do by increasing everyone’s Home Insurance premiums.

More Home Insurance Claims have pushed up the Cost of a Home Insurance Policy

Home Insurance premiums have certainly been impacted by rising costs – just as every sector of the economy has been. But another factor that has impacted the price of a Home Insurance policy, in 2023 specifically, is a rise in the number of claims made by customers in 2022. And to explain that, the UK Insurance Industry reminds us about the weather.

2022 in the UK saw significant storms – three of the four most significant happened in the same month (February) meaning that damage was made increasingly worse before repairs could begin. We then had a very hot, dry July – leading to property damage from wildfires and, much more widely, many more issues with subsidence as foundations dried and collapsed. To finish the year off, a period of below freezing temperatures before Christmas saw higher-than-average claims for damage caused by burst pipes and other cold weather issues. Add all these conditions together and the annual total cost of claims made was significant.

How can I save money if everybody’s Home Insurance has increased?

Good question – easy answer: The best approach is always to compare quotes and only pay for the cover you need. Your current Home Insurance provider may have offered you a great value renewal quote, or it may be really, really expensive compared to other insurance firms. The only way you will know is by getting a number of quotes for the policy and reviewing them side by side. Using a one form comparison tool helps you do this quickly and easily. You can get started on our Home Insurance page if you’d like to review what’s available before you renew.

Review before you Renew

Review your renewal quote alongside prices from other leading providers. One form, lots of UK Home Insurance quotes to compare.

Are Rising Costs the only Reason for Higher Insurance Prices?

The increased cost to UK Insurance Providers of covering a claim are a big factor in the increased cost to UK Insurance Customers of taking out either a Car or Home Insurance policy. But they aren’t quite the whole story. Changes in the FCA regulations governing how both Car Insurance and Home Insurance are sold in the UK have influenced prices over the last few years.

In January 2022, rules were introduced to stop insurance providers from charging existing customers more to renew a policy than they would charge a new customer to take out the same policy. This practice is sometimes referred to as ‘price walking’ and effectively became a kind of penalty for loyalty to the same insurance provider. Stopping this practice felt like a good thing for Car and Home Insurance customers, and one impact of this change was that, in 2022, many motorists actually received a renewal quote that was less than they had paid the year before.

Lower costs for Insurance than the previous year obviously felt great for those customers who experienced them in 2022, but it has meant that now insurers needed to increase the price of their Insurance premiums, the year on year percentage increase on what you are being asked to pay for UK Car Insurance or Home Insurance feels very substantial.

Can I Beat Rising Insurance Costs?

You may not be able to beat inflation, but you can do your best to find the best possible price for the Insurance you need.

  • Review before you renew – your existing Insurance Provider may not be the cheapest for your circumstances, even if they were last year.
  • Read the policy details of any cover you are considering – don’t pay for things you don’t need
  • Remember that you want the right price for the right policy – you can always pay less by having less cover, but if that leaves you unable to make a claim when you need to, then you will potentially face even higher costs.
  • Compare quotes carefully – If you complete numerous forms on different websites to compare UK Insurance quotes, make sure that they are all offering the same things – compare like with like.
  • Try one form comparisons like the ones on our Car Insurance and Home Insurance pages – all your insurance quotes will be based on the same single set of information, so you can quickly compare costs and cover.