Data from Halifax Home Insurance revealed that throughout 2022, the number of subsidence – more commonly known as ground sinking – cases received by the insurer in August and September was three times the usual monthly average. The insurer recorded 45% more claims compared to the previous year, with its data providing insight into the impact of hot weather on homes in the UK.
Dry weather is a significant contributor to subsidence. During dry spells like last year's drought, homes built on clay-rich soil suffer as trees and bushes draw away moisture. This causes the clay to shrink, leading to foundation issues and structural damage.
According to a report from The Guardian, one case settled by Halifax involved a payout of over £365,000 for repairs, underscoring the potential severity of the damage caused.
“We have seen a direct impact of the unusually high temperatures of last summer,” Halifax home insurance claims expert Tim Downes said. “The impact of climate change on severity and frequency of weather events such as extreme heat, storms and flooding is unquestionable.”
The Association of British Insurers (ABI) reported that the industry anticipated payouts of £219 million for subsidence claims in the previous year, the highest amount since 2006 when parts of the UK also faced a drought.
Out of the 23,000 subsidence claims in 2022, 18,000 were made in the second half of the year, following the summer heatwave. The ABI noted that these claims were part of a wave of weather-related claims, including those arising from storms and burst pipes.
Extreme weather is also leading to an uptick in claims on contents policies. Tesco Bank, for instance, reported an increase in claims involving broken freezers due to the strain caused by the heatwave.
While the ABI didn't comment on climate change's impact on future premiums, experts like Matthew Harwood from Confused.com anticipate that extreme weather's increasing frequency and cost of repairs will likely contribute to rising insurance prices.
“As weather conditions continue to be more extreme in the UK, it’s likely more people will be making claims for damage to their property or possessions,” Harwood said.
Citing the cost-of-living crisis as the primary driver, Harwood explained that more policyholders will turn to their insurance covers rather than paying out of their own pockets, even for smaller claims.
“Because of this, prices could increase as insurers have to adjust their pricing to account for the increase in claims. And this is not just because of the frequency of claims, but the cost of claims too. Everything is becoming more expensive, so repairs and replacements are likely to cost insurers more to cover,” Harwood said.
According to ABI figures, the average price paid for home and contents insurance combined in the first quarter of 2023 was £315, 6% higher than the previous period in 2022.
“Last year’s storms and record-breaking temperatures were a dramatic reminder of the importance of home insurance, with insurers paying out £473m to support customers affected by storms Dudley, Eunice and Franklin, and expecting to pay £219m in subsidence claims,” an ABI spokesperson said. “We would always recommend shopping around when looking for insurance but be sure to get the policy that meets your needs, not just based on price.”
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