Could your Home Insurance be costing you more than you think?

How do you treat your insurance’s renewal email? It could be costing you more than you think — in some cases, twice over. Here’s what’s really going on, and why five minutes of checking now could save you a lot more than money down the line.

The FCA’s 2020 market study found that home insurance customers who stuck with the same provider for over five years were paying £287 a year on average, compared with just £165 for new customers buying identical cover. That’s a markup of more than 40%. Since January 2022, insurers have been required to offer renewing customers a price no higher than that charged to new customers for the same risk. But research shows that since the reform, switching still saves UK homeowners £80–£200 a year on average.

We’ve pooled together some common questions to help you get the best insurance and cost for your needs:

Q: How many people do shop around?

Not many. Consumer Intelligence data shows only around 35% of home insurance policyholders switched provider in the first three quarters of 2025. The other roughly two-thirds just let the renewal go through.

Q: Is it worth the hassle?

Yes, because you might be underinsured. When the figure used to calculate what your insurer will pay out no longer matches what it would cost to rebuild your home or replace your belongings. UK construction costs have risen by almost 40% over the past six years, but most people haven’t kept pace. Which? found that only 45% of homeowners had checked or updated their rebuild cost figure in the past two years, and 18% admitted they’d never reviewed it at all.

Q: How would this affect my claim?

If your home is insured for less than its true rebuild cost, most insurers won’t just refuse to cover the shortfall on a total loss. They’ll proportionally reduce any claim you make, even a small one. Insure your home at 80% of its real rebuild value, and a straightforward £10,000 claim could be cut down to £8,000—automatically, regardless of how minor the damage was. One industry estimate suggests around 76% of UK buildings are underinsured, by an average shortfall of 37%.

Q: Should I check my contents insurance as well, or is it just buildings?

Both. Contents policies are usually “new for old,” which means your sum insured needs to rise in line with what you’ve accumulated. Like the new furniture, a new TV, that bike you bought last spring. Auto-renewal just rolls over whatever figure was on the policy last year, regardless of whether it still reflects reality.

Q: What should I do about it?

Don’t let the renewal sail through unchecked. Most insurers are required to give at least 21 days’ notice before renewal. Use that window to compare the market on price and double-check that your buildings and contents sums insured genuinely reflect today’s rebuild and replacement costs, not whatever figure was carried over from years ago.

Here’s our question for you: When did you last check your home insurance?

Having the right advice can make all the difference. Home insurance isn’t just about finding the cheapest premium, it’s about making sure you have the right protection in place should you ever need to make a claim. An adviser can help identify gaps in cover, ensure your sums insured are accurate, and give you confidence that your policy is fit for purpose.

We’ll review your cover, compare the market, and make sure your home and belongings are insured appropriately. And when your renewal comes around, we’ll get in touch, review your policy, and check the market again on your behalf, so you don’t have to. No cost, no obligation – just the peace of mind that comes from knowing you’re properly protected and not paying more than you need to.

Sources

• FCA loyalty penalty rules and £287 vs £165 figures — Ideal Home / FCA press release
• Post-reform savings from switching (£80–£200/year) and price-walking mechanics — AnnualVault, “The Loyalty Tax”
• Home insurance switching rates in 2025 — Consumer Intelligence, “UK Home and Motor Insurance in 2026”
• Rebuild cost review habits and Which? survey data — Which?, “Could you be underinsured?”
• The “average clause” and underinsurance mechanics — Lemonade UK, “What is Underinsurance?”
• 76% underinsurance rate and 37% average shortfall — Lemonade UK, “What is Underinsurance?”
• UK construction cost rises and rebuild valuation guidance — Howden Insurance, “Outdated rebuild costs”
• Renewal notice periods and review timing — Personal Life Manager, “Home Insurance Renewal UK: Complete Guide 2026”