TL;DR
- Home insurance covers buildings (the structure) and/or contents (possessions inside the property).
- FCA pricing rules since January 2022 ban charging renewing customers more than equivalent new customers.
- Average UK home insurance premiums rose through 2024-25 in line with rising rebuild and replacement costs.
- Underinsurance - insuring for less than the full rebuild cost - is one of the most common claims problems.
- Policies are regulated by the FCA. Complaints go to the Financial Ombudsman Service.
Last reviewed: May 2026 | Sources: FCA, ABI, FOS
Home insurance in the UK is regulated by the FCA. This guide explains what policies cover, how premiums are set, and what policyholders should check. For travel-related insurance see the travel insurance for over 70s guide or senior travel insurance guide.
Buildings insurance: what it covers
Buildings insurance covers the physical structure of a property and permanent fixtures. Standard cover includes damage from fire, flood, storm, subsidence, escape of water, and malicious damage. Most policies exclude gradual deterioration and wear and tear. Mortgage lenders normally require buildings insurance as a condition of the mortgage offer.
Contents insurance: what it covers
Contents insurance covers personal possessions inside the home. High-value single items may need to be separately specified. Personal possessions cover can extend contents insurance to items outside the home. For specialist possessions see also the mobile phone insurance guide.
RELATED GUIDES: Home, Property, and Insurance
How home insurance premiums are calculated
Key factors for buildings insurance include the rebuild value, construction type, location flood and subsidence risk, age of the property, and claims history. Rebuild value is the cost to demolish and rebuild the property from scratch - not the market value. Rebuild costs have risen significantly since 2022 due to construction material and labour inflation.
FCA pricing rules: no loyalty penalty
From 1 January 2022, FCA rules (PS21/5) prohibit home and motor insurers from charging renewing customers a higher premium than they would charge an equivalent new customer for the same product. Insurers can still increase premiums at renewal to reflect genuine risk changes, but cannot apply a renewal loading purely because the customer is unlikely to shop around.
FCA regulation and complaints
Home insurance providers must be FCA-authorised. Insurers must provide an Insurance Product Information Document (IPID) before the customer enters into a contract. Complaints unresolved within 8 weeks can be referred to the Financial Ombudsman Service. FSCS provides 90% compensation for outstanding claims if an authorised insurer becomes insolvent.
Disclaimer: This article is for informational purposes only. It does not constitute insurance advice. Policy terms, cover, and premiums vary significantly between providers. Always read the IPID and policy schedule before purchasing. Verify the provider FCA authorisation before buying.
Frequently asked questions
Is home insurance compulsory in the UK?
Buildings insurance is not legally compulsory but mortgage lenders require it as a condition of the mortgage. Contents insurance is not compulsory for any category of occupier.
What is an excess on home insurance?
An excess is the amount the policyholder pays towards each claim before the insurer pays the rest. There is typically a compulsory excess set by the insurer and an optional voluntary excess chosen by the policyholder. A higher voluntary excess reduces the premium but increases the amount paid in the event of a claim.
What does the FCA loyalty penalty ban mean for renewals?
Since January 2022, insurers cannot charge renewing customers more than a new customer for the same risk and cover. If the renewal quote appears higher than quotes available to new customers for equivalent cover, the policyholder has grounds to challenge the insurer or switch provider.
What is underinsurance?
Underinsurance occurs when the sum insured is lower than the actual cost to replace or rebuild. A total loss claim may result in the insurer applying an average clause, paying only a proportional amount. Regularly reviewing rebuild cost against RICS guidance reduces this risk.
Does home insurance cover accidental damage?
Accidental damage is usually an optional extension at additional cost. Standard policies do not automatically include it. Check the policy terms to confirm whether accidental damage is included before assuming cover.
How this guide was verified
This article draws on FCA Policy Statement PS21/5, ABI home insurance statistics, FOS complaint data, RICS house rebuilding cost guidance, and FSCS guidance. No secondary aggregator sites were used.
