Little movement in home insurance premiums
The average quote for a combined home buildings and contents insurance policy has remained static over the past three months, with just 5p added to the average annual cost of a policy, says the AA’s latest benchmark British Insurance Premium Index.
The Shoparound average for the five cheapest quotes for each ‘customer’ in a nationwide basket of risks and based on prices from direct insurers, brokers and price comparison sites, showed that the premium for a combined policy stands at £163.06. But this is 5.3% less than a year ago.
Similarly, prices for standalone home buildings and contents policies also moved little. The Shoparound average quoted premium for buildings rose by 19p or 0.2% to £114.92 over the quarter (but over 12 months has fallen 8.1% from £125.04). For a contents policy, the premium fell by 2.5% or £1.61 to £62.01 (down 7.7% from £67.18 over 12 months).
Janet Connor, managing director of AA Insurance said that the year ended positively for home insurers but suggests that premiums may be levelling off after a long-term downward trend.
“There is a national preoccupation with the weather but flood and storm damage claims have been well within insurers’ capacity, not affecting premiums,” she points out.
“Home insurance premiums have gradually been falling for around four years but I don’t believe they’ll fall much more. Even so, home insurance is a real bargain: premiums are similar to those quoted when the AA’s Index began in 1994.”
Ms Connor points out that national averages hide regional differences and that homes at greatest risk of flooding are likely to have seen the biggest increases.
“The recent confirmation that Flood Re, the insurance scheme designed to allow homes most at risk of flooding to obtain affordable insurance cover, will finally enter the statute books later this year is welcome news. It will be funded by a levy of around £10 on all home insurance buyers.
“There is a lot of detail still to be ironed out but that at-risk families will be able to obtain competitive premiums, capped depending on their council tax band, will be of great relief to them.”
Ms Connor said that it is vital the Government maintains flood defence spending. “Last week scientists announced that sea levels are rising faster than expected, which is unwelcome news for some coastal communities. And January has already seen some damaging weather, including storms and localised flooding, even reports of tornadoes.
“This should be a timely reminder that British homes are increasingly vulnerable: and not just those identified as being at highest flood risk. Flash flooding can happen anywhere and doesn’t just ruin homes; the clear-up has a major impact on peoples’ lives, their health, the local infrastructure and the economy.
“It should also remind householders to look at their own cover.
“There is evidence that the number of homes protected by contents cover, particularly, has fallen and perhaps a third of homes that do have cover are underinsured. Now might be a good time to not only confirm that they are insured but that it is adequate, too.
“After all, peace of mind about the protection of your possessions for a whole year, for less than the amount you’d pay to fill your car’s fuel tank, has to be a bargain!”