Home insurance can be complicated — whether you’re shopping for it, renewing it, or making a claim for property damage, you’ll likely have to overcome some hurdles at some point. But in 2025, what are the main challenges facing policyholders, and how can you make sure you’re fully protected for all eventualities?
In this blog, we’ll take a closer look at some of the biggest home insurance challenges currently causing headaches for homeowners in the UK, including…
...before providing some top tips to make sure you're fully protected.
In 2025, we’re seeing costs rise all over the place — the weekly food shop, energy for our homes, fuel for our vehicles, and even leisure experiences like visiting the cinema or dining out are all costing more, so it’s not surprising that we’re seeing a rise in our insurance premiums, too.
It’s not just home insurance premiums that are affected by inflation — we’ve seen a marked increase in costs associated with car insurance, life insurance, travel insurance, and even pet insurance.
Data shows that between 2021 and 2024, buildings insurance premiums surged by roughly 85%. Whilst premium hikes may have been softening slightly in recent months, over half of those facing increases have still seen their premiums rise by more than 10%.
This Rise has mostly been attributed to high rebuild and labour costs. Whilst material prices have started to stabilise, skilled labour remains in short supply, and these elevated premiums have caused the majority of policyholders to delay or avoid making claims for damage to their property for fear of a big cost increase when the time comes to renew. As a result, fewer claims are made, and more extensive repairs are ultimately required in the long-run.
With the recent surge in online-only insurance providers, we’ve seen a matched increase in the number of policies being sold that provide an inappropriate level of cover.
With fewer overheads, these new online insurers are undercutting bricks-and-mortar brands and taking advantage of the online shopping experience, providing one-click insurance policies that are designed to keep homeowners uninformed about what they’re purchasing.
For example, some policies may dispute what counts as “storm damage”, whilst others will exclude certain types of damage altogether despite them being a standard inclusion in most policies. This ultimately leads to seemingly reasonable claims being denied, and policyholders left to pay for the damage out of their own pocket.
This lack of clarity in insurance policies and the poor claims handling experienced by UK policyholders is an issue that’s recently taken the limelight, thanks to independent consumer rights champion, Which?.
They’ve been conducting research into the way insurance policies are explained and sold to customers, which has revealed significant shortcomings across the board. With sales processes that seek to misrepresent the level of cover being offered, and the various loopholes that seem to be baked into policies and claims procedures, it’s no surprise that policyholders are left with little understanding as to what their policy actually protects them against.
Add to this the fact that Which? study data revealed that two thirds of complaints upheld by the Financial Ombudsman Service cited “negative emotional impact” as part of their complaint, and we start to get a clearer idea of the bigger picture.
As a result, Which? have launched the “Insurance Rip-Off” petition in an attempt to ensure fair pricing for insurance policies and fair treatment for those pursuing a claim. You can read all about it and add your signature to the list by reading our recent blog.
Loss assessors provide a service that supports policyholders throughout the claims process, often resulting in greater settlement outcomes, but there’s a lot of misunderstanding around who can access this support and how.
Some insurers try to dissuade their customers from working with a loss assessor, but this is simply because doing so can lead to a better result for you, and a worse result for them.
Whilst it’s generally recommended to enlist the help of a loss assessor as early in the process as possible, they may be able to get involved in your claim at a later stage, even if it’s already being reviewed by your insurer.
So, if you’re currently facing a complicated home insurance claim and looking for an expert to guide you through it, here’s a brief summary of how a loss assessor can help:
In our 17+ years of experience supporting homeowners to bounce back from property damage, we’ve seen time and again how beneficial it is to have a loss assessor involved in your claim. That’s why it’s a core part of our process.
Need our help? Get in touch.
The surge in online insurance providers has meant that even some of the largest bricks-and-mortar providers are unable to compete on price, so they’ve been forced to leave the market. This has resulted in fewer suppliers for homeowners to choose from when it comes to renewal time.
Additionally, some renewals are even being refused by providers due to clients’ claim histories, meaning they’re forced to pay higher costs to find a policy that protects them.
In 2025, underinsurance is a significant concern for both residential and commercial property owners. Recent survey data shows that 76% of the buildings in the UK are underinsured. Whilst this figure has fallen from the all-time high of 83% recorded in 2022, the gap between insurance levels and true rebuild cost has continued to widen in recent years due to inflation-related increases in construction costs, and there are no signs as yet that the gap is beginning to close.
A subsequent survey conducted by Howdens suggests that, on average, the level of underinsurance for properties sits around 65%, meaning home owners and commercial property owners are paying for policies that won’t cover their full rebuild cost, resulting in significant financial losses for policy holders in the event of a claim.
Figure 1: The level of property under/overinsurance in the UK by region. Source: RebuildCostAssessment.com
Those involved in the industry will know that this is not a new problem, and in fact, the risk of underinsurance has been plaguing UK properties for a number of years. So why does it happen, and what can you as a policy holder do to make sure you’re protected?
Many homeowners set their insurance based on the market value of their home, rather than the actual rebuild cost, which can be lower or higher than the market value, but is higher in most cases.
This means that should the worst happen and you find yourself needing to make a claim for rebuilding your property, the insurer will only need to pay out on the amount covered by your policy. If this is merely the market value, you may find that the payment from your claim falls short, and end up needing to pay the rest out of your own pocket.
Another common cause of property underinsurance is when homeowners make changes or improvements to their home and forget or neglect to inform their insurance provider. If you’ve made significant changes, such as building an extension or carrying out major refurbishment work, it’s vital to update your policy to reflect these changes and ensure the full rebuild cost has been accounted for.
Inflation has increased costs across the board, and the construction sector definitely isn’t immune. The cost of building materials and labour has surged in recent years, and many insurance policies may not be keeping pace with the rate of inflation, leaving properties underinsured if the policy sum isn’t regularly reviewed and updated.
We all like to believe that the worst won’t happen and we’ll never need to make a claim on our home insurance policy. But sadly, accidents, leaks, and natural disasters do happen, and such an event is when the full impact of underinsurance is felt. For example:
If a home is underinsured, claims could be paid out based on a proportion of the loss. For example, if your home is insured for 80% of its rebuild value and suffers £100,000 in damage, your insurer may only be willing to cover £80,000, leaving you to foot a £20,000 bill.
Unfortunately, insurance companies can and often do change their terms and conditions on a regular basis (i.e. annually). If you’re not keeping up to date with these changes, you might find that certain risks or scenarios are no longer covered when you come to make a claim. It’s important to stay on top of any changes to the terms of your policy so that you can update it or seek coverage from another provider if it no longer covers what you need.
There are a few things you can do to mitigate the risk of falling into the underinsurance bracket and make sure you’re fully protected for all eventualities.
With inflation constantly impacting the cost of things, it’s important to review and adjust your home’s rebuild cost on a regular basis. The Royal Institution of Chartered Surveyors’ (RICS) rebuild calculator is a helpful tool you can use for this purpose, or you may consider consulting your own surveyor on a more regular basis to make sure your policy coverage is as accurate as it can be.
Whenever you invest in home improvements, extensions, or renovations, be sure to notify your insurer, as these changes could increase your property’s value and rebuilding costs.
Some policies have an automatic inflation protection clause, which adjusts the insured sum annually to account for rising rebuild costs. It’s always worth checking your policy to see if this is something your insurer has put in place.
In the current cost of living crisis, every penny saved goes a long way. With this in mind, here are our top tips and key takeaways for protecting yourself, your home, and your pocket in 2025.
Make sure you know the true rebuild cost for your home, and that your policy reflects it.
Whilst comparison sites may help you to find the cheapest policies on the market, purchasing a policy online often comes with downsides — namely, a lack of clarity over what’s actually being covered. The best way to ensure your home insurance policy is appropriate for your needs is to speak with an independent insurance broker.
Unfortunately, we can never know when property damage is going to happen, but there are a few things you can do to reduce the risk. Staying on top of home maintenance, pruning invasive trees, regularly checking the condition of your roof, and clearing drains can all help to minimise the risk of extensive damage. And if you document your efforts, your insurer will have less of a reason to deny any claim you may need to submit in the future.
It’s not the most exciting thing to do with your free time, but reading your insurance policy will give you a clear idea of what’s covered and what isn’t, saving you a lot of stress if the time ever comes that you need to make a claim. And should that be the case, consider bringing on board an expert who can support you throughout.
We have over 16 years of experience in the insurance repairs industry, and strong working partnerships with a number of reputable independent loss assessors. We provide a complete specialist service to support you in achieving the best possible outcome from your claim and getting back to normal.
If you’re looking for someone to take the stress from your shoulders, contact our team today.