Home insurance premiums build up

Inflation is on the rise, petrol prices are increasing and now new analysis from moneysupermarket.com shows home insurance premiums are also on the up.

Data from January 2010 to March 2011 shows the average cost for home insurance has increased 6 per cent or 2.5p per day, taking the typical cost for buildings and contents cover from £142 to £151.

Although the price of home insurance isn't yet rising at the same rate as car insurance, which is up by 31 per cent on 2010 levels, insurers are facing the cost of last years huge winter repair bills for the freezing winter weather and the costly clean up from incidents of flooding. These severe weather occurrences now appear to be a trend rather than a one off event, which all add to the cost of premiums for consumers.

Julie Owens, head of home insurance at moneysupermarket.com said: "The cost of insuring homes in the UK is steadily on the increase. Unfortunately for consumers, things look set to get worse with the increase in prices unlikely to slow down in the coming years. Although it's doubtful the percentage rise in home insurance premiums will match that of car premiums, it wouldn't be a surprise if we got to ‘double digit' percentage increases.

 With this in mind, we urge anyone looking for a home insurance policy to shop around and ensure that they aren't paying over the odds for their home insurance cover."

Another factor hitting policy holders hard is the rise in fraudulent claims. According to data from Legal and General, false claims add around £44 to the cost of every premium sold, meaning honest home owners are footing the bill for those who are cashing in on their insurance claims.

Julie Owens added: "The amount of fraudulent home insurance claims is really shocking; there are now around 170 per day. It is a shame that dishonest consumers are forcing up costs for everyone. This has resulted in many insurers no longer promoting incentives or offering a discount on their products. The only way for consumers to ensure they get a good deal is to compare prices and ensure that they get the right level of cover they need at the lowest possible price."

moneysupermarket.com's home insurance top tips:

Change the locks - If you've moved to a new home you never know who might still have a key. It is important to maintain locks. Five-lever mortise locks are recommended for external doors while windows should ideally have two bolt locks.

Install a good home security system - Sometimes there are alarm systems that might be preferred by an insurer. The NACOSS standard alarm can cut premiums with some companies by 7.5 per cent.

Time-switch lights - Your home is more vulnerable to theft when you are not around. Time-switch lights will give the impression that you are at home.

If you are away - Remember to cancel newspaper and milk deliveries and ask someone you can trust to open and close the curtains and collect mail.

Keys - Don't leave them in obvious places such as under a doormat. Also beware of 'hook n crook' thefts - where keys are left so close to a door that a burglar can simply hook them through a letterbox and open the door.

Install security lighting - illuminate your visitors for their safety as well as your own. Unwelcome visitors are less likely to loiter if they're 'in the spotlight'.

Join a neighbourhood watch campaign - this can help to reduce your premium if you inform the home insurance company of your participation in a scheme. It can reduce your premiums by up to 5 per cent.

Avoid frozen and burst pipes - If you think pipes are frozen, turn off water at the valve and header tank to cut down the water that can escape.

Fire - Fit a smoke alarm and take simple steps to avoid accidents. Most fires in the home are caused by smoking or cooking; never smoke in bed, don't leave cigarettes lying around and don't leave cooking unattended. Other fire tips include closing doors at night to contain fires, check the home is safe before going to bed and keep matches away from children.

Don't smoke - As covered above, the fire risk greatly increases if you smoke cigarettes. Most insurers will now ask if you are a smoker.

Think about your cover - Do you really need accidental damage cover? This can increase premiums by 25%. Think carefully about the add-ons you need.

Don't claim unless you need to - The fewer the claims, the higher your no claims discount. So for minor issues that would be inexpensive for you to cover with your own cash, think twice before making a claim.