Home insurance premiums moving up
Home insurance premiums have risen according to the latest benchmark British Insurance Premium Index, with the Shoparound price for buildings rising by 1% and contents by over 2%. However, insurers are reporting more theft claims, suggesting that premiums may come under growing pressure after several years of relatively little movement.
Premiums in the home insurance market have moved little since the Index began although over the past year, the average cost of a home buildings policy has risen by nearly 13% and this shows little sign of easing. Contents cover, on the other hand, has risen slightly after previous falls. Similar patterns are shown by both the direct and broker market as well as on price comparison sites.
Simon Douglas, director of AA Insurance, says: "Buildings cover has over recent years suffered from the effects of weather damage, which can occur almost anywhere. Events that were once rare or isolated are becoming more common and insurers are concerned that they are able to meet future severe weather and flood claims.
"The severe winter also caused damage to thousands of homes with burst pipes and damage to roofs and gutters.
"I believe that we'll see premiums continue to rise, perhaps adding a further 10% to the cost of an average buildings policy by the end of the year.
"On the other hand contents insurance has moved little over the past decade or so. Although insurers are reporting growing numbers of theft and accidental damage claims this continues to be a highly competitive market and although I don't think this increase marks the start of a trend, insurers are concerned that they will need to build their reserves before long."
Douglas adds that during a recession, families seeking to economise often decide not to renew their contents cover. "Unfortunately, that's just when claims tend to rise so this could be a short-sighted strategy."
The average Shoparound cost of a combined home and contents policy also rose, by 3.5%, and 1.6% on price comparison sites.