Why a home insurance renewal can no longer cost more than a new customer pays

The renewal notice for home insurance tends to arrive about three weeks before the policy ends, and it is easy to let it roll over. For years that habit was expensive. Insurers often offered a keen price to attract new customers and then nudged it up, year after year, for people who stayed. The industry called it price walking; most customers called it the loyalty penalty.

The Financial Conduct Authority, which regulates insurers, changed the rules from the start of 2022. Understanding what the change does, and what it does not do, makes the annual renewal a quicker and calmer job.

What used to happen at renewal

Before the reforms, the FCA found that many long-standing home and motor customers paid considerably more than new customers for the same cover. The difference was not explained by risk. It reflected the fact that people who do not shop around are less likely to leave. Since 2017 renewal notices have had to show last year’s premium next to the new one, which made rises easier to spot but did not stop them.

The rule, in plain terms

From 1 January 2022, when an insurer offers to renew a home or motor policy, the price must be no higher than the price it would offer an equivalent new customer for the same cover, through the same sales channel. A channel is the route you buy through: directly with the insurer, by phone, through a broker or through a particular price comparison site.

The FCA package also made it easier to stop automatic renewal. Insurers must give customers straightforward ways to cancel auto-renewal, so that staying put is a choice rather than a default you cannot easily undo.

So if you have renewed with the same insurer for eight years, your quote should not be higher than the quote a newcomer with the same house, the same cover and the same claims history would get through the same route.

What the rule does not do

• It does not stop prices rising. If repair costs, claims or the insurer’s view of your area go up, new and existing customers both pay more.
• It does not compare insurers. Another company may still quote less for similar cover. The FCA itself said customers can still benefit from shopping around or negotiating.
• It compares like with like. A different excess, a lower contents limit or a missing add-on can make another quote look cheaper when it is not equivalent.
• It is channel-specific. The same insurer can sell at different prices through different channels.

An example renewal

In this invented case the renewal follows the rule, because it matches what a new customer would pay, but it is still £55 more than last year. The cheaper alternative carries higher excesses and leaves out accidental damage, so the comparison only means something once the cover is lined up.

What to compare when the notice arrives

Our checklist of points to line up, whichever insurer you choose:

• Buildings sum insured. This should reflect the cost of rebuilding the house, not what it would sell for.
• Contents sum insured. A quick room-by-room estimate often shows the figure has drifted.
• Excesses. Check the standard excess and any separate one for escape of water or subsidence, which are often higher.
• Accidental damage. Whether it is included for buildings, contents or both.
• Single-item limits. Jewellery, bicycles and laptops above a set value may need listing.
• Items away from home. Cover for belongings outside the house is often an optional extra.
• Unoccupancy rules. Many policies restrict cover if the home is empty for more than a set number of days, which matters for long trips or hospital stays.
• Add-ons. Legal expenses and home emergency cover may already be included, sold separately or duplicated elsewhere.

Has it worked?

When it introduced the rules, the FCA estimated savings for consumers of £4.2 billion over ten years across home and motor. Its evaluation, published in July 2025, found the reforms were effective at reducing price walking. In home insurance, the average gap between what new and existing customers paid almost halved, from £95.38 to £49.17. The FCA found no statistically significant evidence that the rules themselves caused changes in home insurance prices overall. For motor insurance it reported statistically significant evidence of £1.6 billion of consumer savings over ten years.

In other words, the loyalty penalty is much smaller than it was, but it has not disappeared from every comparison, and prices still move for everyone.

If something goes wrong

If you think a renewal price breaks the rule, or a claim has been handled badly, complain to the insurer first. It has up to eight weeks to respond. You then have six months from its final response to take the complaint to the Financial Ombudsman Service, which is free to use.

Who this matters for, and what to check

Anyone who has renewed with the same insurer for several years without comparing should take a closer look this year, as should anyone whose home has changed: an extension, new windows, a lodger, or a long spell away. Life changes such as retirement can also make day-time occupancy and some risks look different to an insurer.

If you are tidying up household paperwork more widely, our pieces on smart meters and the Priority Services Register cover the other services tied to your address.