Home insurance premiums flat
The latest benchmark AA British Insurance Premium Index shows that over the first quarter of 2012, the average cost of annual home and contents insurance policies fell slightly after a long period of sustained increases - particularly for buildings cover.
The Shoparound summary, an average of the five cheapest quotes from a range of insurers against a nationwide basket of risks, shows that the cost of buildings cover increased by 0.5% to £181 while for contents cover, the premiums dropped by 1.7% to £109. The premium for a combined policy, increased by 1.5% to £260.
Over the 12 months ending 31st March, the Shoparound index shows premiums for buildings rose by 7.1%; for contents 3.7% and for combined buildings and contents policies 7.6%.
Simon Douglas, director of AA Insurance says that while the premium increases of the past couple of years, particularly for buildings insurance, appear to have ended insurers remain concerned about the effects of severe weather events on homes.
"We escaped with a relatively mild winter which hasn't resulted in an avalanche of claims for damage caused by low temperatures and heavy snowfalls.
"In fact, the weather has remained dry which has led to widespread hosepipe bans and speculation that there might be an increase in subsidence claims.
"It is true that extended periods of dry weather can lead to costly subsidence problems and although we are seeing a small increase in such claims it will take sustained low rainfall coupled with high summer temperatures to cause another catastrophic ‘subsidence year' for the insurance industry."
Meanwhile, the insurance industry is pressing for government action to ensure that after an agreement between the Association of British Insurers and the Government expires in June 2013, homes in flood-risk areas will still be able to get cover.
Mr Douglas says it's vital that a solution is reached quickly in order to ensure that at-risk homes can continue to be insured
"The UK insurance industry is unique in that its home policies automatically include flood cover. In other countries, flood risk is bought separately or is underwritten by state pooling arrangements funded by taxpayers," he adds.
Mr Douglas points out that home insurance continues to provide extremely good value for money. "The market average premium has risen by only £67 since 1994, when the quarterly AA Index started - an average increase of less than £4 per year. Over the same period, the market average premium for comprehensive car insurance has risen by over £64 per year."