The Intermediary – December 2025 - Flipbook - Page 71
P RO T E C T I O N
Opinion
The November
Budget ripple effect
A
s the ‘ripple effect’ of
the November Budget
is being absorbed,
what will be the
effect on decisions
by homeowners in
relation to household costs such as
home insurance?
The Autumn Budget always sends
shockwaves through households, but
this year’s announcement has created
a particularly complex landscape
for homeowners. Rising taxes,
adjustments to welfare thresholds,
new electric vehicle (EV) mileage
tax, all mean that individuals are
reassessing everything from energy
use to discretionary spending.
One area that rarely gets immediate
aention, yet is deeply affected by
fiscal policy, is home insurance.
While the Budget did not directly
reference for home insurance
premiums, its influence will be felt
indirectly. That’s because home
insurance pricing depends on several
economic variables, such as inflation,
the price of building materials, labour
costs, household income, extreme
weather risk, and the financial health
of insurers themselves.
Rising costs
Tax and spending changes influence
the construction sector. If building
or repair costs rise – whether due
to supply-chain pressures, higher
employer costs, or general inflation –
insurers face larger potential payouts for claims. A simple example: if
repairing a damaged roof now costs
20% more than it did last year, the
insurer’s exposure increases.
The Budget’s broader inflationary
effects, particularly if driven by tax
changes or higher energy prices, could
therefore nudge home-insurance
premiums upward. For homeowners
this adds another layer of financial
pressure. Changes affecting property
taxation, such as disincentives for
high-value properties, can also
influence home-insurance behaviour.
When homeowners feel squeezed,
they oen review all regular expenses
to identify savings.
Insurance, though essential, is
one of the areas people are tempted
to cut back on, either by switching to
cheaper policies or by reducing addons such as accidental-damage cover.
But a false economy lurks here: underinsuring or stripping away essential
protections can leave households
exposed to substantial financial risk at
exactly the time when personal buffers
are already stretched thin.
The Budget’s tax changes –
particularly those affecting income
thresholds – mean disposable income
may fall for many households. When
people experience financial stress,
insurers tend to see increased claims
activity, whether due to delayed
repairs leading to bigger problems
later or higher burglary risk. This can
lead insurers to adjust risk models,
potentially resulting in higher
premiums for areas or demographics
seen as more vulnerable.
Government incentives
If Government investment in
flood defences or climate resilience
infrastructure increases, insurers may
feel more confident underwriting
homes in higher-risk areas.
Conversely, if public spending
tightens and local resilience projects
are delayed, insurers may factor
greater risk into their pricing models.
The frequency of climate-related
damage storms, flooding, subsidence
is already a major driver of UK home
insurance costs. Budget decisions
that touch on infrastructure, energy
policy, or local authority funding can
amplify or ease these costs.
What homeowners
could do now
For individuals, here are actions that
can be taken now:
STEPH DUNKLEY
is development director
at Safe & Secure
Looking to their brokers to get the
right advice and competitive cover
Understanding excesses and
how they can help to reduce the
monthly premium
Having clarity on optional addons to optimise spend on home
insurance
Managing property maintenance to
minimise risk of claiming
Investing in security or energyefficiency upgrades
What mortgage brokers
should do now
To support clients through the postBudget landscape, brokers can take
proactive steps:
Educating clients early on the
benefits of using specialist home
insurance brokers
Encouraging insurance to be part of
affordability planning
Warning against underinsurance
Partnering with trusted insurance
providers to improve client
outcomes
While the November Budget didn’t
explicitly target home insurance,
its ripple effects will influence
homeowner behaviour, insurance
costs, and affordability for the
foreseeable future. For mortgage
brokers, being able to anticipate
these shis adds real value helping
clients protect their homes, while
maintaining financial resilience
in a more demanding economic
environment. ●
December 2025 | The Intermediary
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