'My home insurance renewal quote was 10 times higher than last year': what's behind huge jumps in premiums?

After record numbers of weather-damage claims last year, home insurance premiums are now undeniably on the rise - with the average premium for combined cover up by roughly £67 (19%) between early 2023 and early 2024.

But even accounting for this trend, Motty Ludwig - a teacher from Salford - was left utterly perplexed by the numbers in his insurer's renewal offer in early July.

Last August, he paid £646 for his combined home insurance policy. This year, his insurer offered him a premium more than ten times that amount - a staggering £6,706. 

Here, Which? looks at why some customers are being offered such huge price increases, why others are being denied new cover altogether, and what not to do if your insurer refuses to quote.

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Insurers backing away from some of their customers

When Mr Ludwig contacted us, he noted he'd made one claim in the year - for the repair of a boiler (requiring around 20 minutes of work and £150 for a replacement part). This minor claim was acknowledged in his renewal letter as contributing to the increase. 

However, when we contacted his insurer, Frontier Home Insurance, it explained that this claim's effect represented a 'very small proportion' of the price hike. The insurer's CEO - Michael Muzio, told us it has needed to make more fundamental changes to how it prices customers, saying 'in line with most insurers the cost of claims has risen dramatically over recent years driven by inflation and weather events. This has required a significant correction to pricing to correct losses.'

The upshot is that it's no longer able to offer competitive quotes to some of its customers, such as Mr Ludwig.

However, Muzio explained that Frontier chooses to always offer a quote at renewal 'regardless of the size of the increase. We do not want our customer's future insurance premiums with other providers to be impacted by a refusal to quote, which some of our competitors may choose to do.'

• Find out more: check our home insurance reviews

The role of underwriting criteria

Mr Ludwig isn't alone in having his insurer seem to back away from him at renewal. Recently, our Which? 1-1 Guidance helpline has been seeing a tangible increase in calls from customers whose home insurers no longer seem interested in competing for their business - in some cases, offering ridiculously high quotes, and in others - not making any renewal offer.

Insurers have criteria about which customers they'll compete for - or be able to offer cover to at all. For example, firms will differ in whether they'll cover homes with thatched roofs, where rooms are being let out, or properties in particular postcodes. 

Insurers' underwriting criteria are revisited continually - and your circumstances are also subject to change (for example you could renovate your home). This means there's always a possibility of finding yourself in part of a group of customers your insurer no longer particularly wants on its books.

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Is a ridiculously high quote better than no quote?

However, this seems to be happening more at the moment. When we spoke with the British Insurance Brokers' Association (BIBA) about cases such as Mr Ludwig's, it suggested that - with prices and claims costs currently going up - insurers are getting increasingly picky about which customers they'll take on or retain. A spokesperson explained, 'Insurance capacity is currently reducing in some areas as insurers adjust their appetite for risk and their pricing practices to target the customers they want to underwrite.' 

It also echoed Muzio's reasoning on why some insurers choose to still provide renewal quotes for customers whose business they don't really want.

'Some insurers prefer to refuse to offer a quote at all, which may cause difficulties for customers seeking cover elsewhere when they have to answer whether they have ever been refused insurance, where they simply no longer want that sort of risk. This is why some individuals may be offered cover at much higher premiums than expected as the insurer has no appetite to offer that insurance.'

• Find out more: if you're struggling to find affordable insurance, BIBA's Find Insurance service might help you track down a specialist broker.

Declaring your insurance has been 'refused'

When you apply for insurance, you will typically be asked if you've ever been 'refused' insurance in the past. If you say 'yes' to this, insurers see it as a serious red flag. 

When we ran test quotes for contents insurance on a major comparison website, declaring a renewal had been refused brought the number of quotes available to us down from 60 to eight - and raised the cheapest available quote from £38 to £103.

The reason for this is that declaring a previous policy was refused or cancelled by the insurer suggests you might have done something wrong in the past which led to the insurer terminating its contract with you - such as breaching the policy terms or failing to disclose important information. 

According to Matthew Harwood, home insurance expert at comparison website Confused.com, 'this could act as an indicator of increased risk to other insurers, who as a result may also choose to decline to quote, or offer a higher price due to their assumed risk that is associated with declined or cancelled policies. Unfortunately, customers aren't able to give details of why their policy was cancelled or declined, so it's easy for insurers to draw their own conclusions.'  

Does your insurer not offering a renewal quote mean you've been 'refused insurance'?

Failing to answer questions correctly when applying for insurance can have severe consequences. If you do it on purpose, it's considered to be fraud. But even if you mislead an insurer by accident, it can result in the insurer declining to pay out at the point of claim.

The problem is, when looking across the four biggest comparison sites, we found little to no guidance on the question around what is meant by insurance being 'refused' - with no information advising on whether you must declare that your insurer wouldn't quote you at renewal. As our earlier illustration shows - if you're cautious and answer 'yes' - many insurers will assume the worst.

We asked several insurers if they expect new customers to declare if their prior insurer hadn't quoted because of a change in its underwriting criteria. Those who answered - Admiral, AXA and NFU Mutual - all told us they didn't, with Aviva also noting, 'We are primarily concerned if a customer has had insurance refused or cancelled due to their actions, such as misrepresentation of material facts or failure to comply with the policy conditions.' 

Industry trade body the Association of British Insurers suggested this view was representative of what was more widely expected: 'We don’t expect an insurer’s refusal to provide a new or renewing customer with a quote to impact on the customer’s future premiums or ability to get insurance. This is different to instances where a customer may have had cover cancelled by their insurer or declined for reasons of fraud, previous deliberate non-disclosure, or failure to pay, which could impact on eligibility for future cover.'

How to approach other insurers

If your insurer has declined to quote you because of its own approach to risk (i.e. rather than a change in your situation or actions that you've taken), you're generally not expected to flag this to new insurers as you're shopping around for quotes.

However - to be on the safe side - where there's ambiguity around whether the insurer's questions apply to your situation, it's worth contacting it before finalising the purchase to confirm it's not something it actually wants to know about.

Meanwhile, if you've had to declare the refusal or cancellation of a prior policy, and are being offered higher prices as a result, it could still be worth contacting the prospective insurer to explain the specifics of why this happened. The extra detail could make a difference in how the insurer views your risk.

• Find out more: how to find cheap home insurance.

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