Home insurance premiums still rising – the AA

The average cost of a contents policy also rose by 2.2% over the quarter to £77.21, a rise of 5.8% over 12 months.  For combined buildings and contents cover policyholders can expect to be quoted on average, £205.55, a three-month increase of 1.5% and 5.7% over the year.

Simon Douglas, director of AA Insurance, said the cost of buildings insurance had risen steadily for just over two years, after a long period of relatively little change. Even the devastating floods of 2007 didn’t produce the big premium increases many predicted at the time, he pointed out.

"But since then, we’ve gone through two severe winters that caused widespread property damage throughout the UK," Douglas said.

"Insurers are also concerned about more frequent severe weather events such flash floods, often in places with no flooding history; wind damage and even damage from extreme hailstorms, lightning strikes and tornadoes. One recent industry report suggests that claims for storm damage have jumped by 68% over the past year.

"Insurers need to consider the potential for future claims and ensure that they have adequate reserves to meet the cost of any extreme and widespread weather damage: for example major flooding or more severe winters."

Douglas suggests that home owners – whether they have insurance or not – should do all they can to reduce the risk of damage to their property from another harsh winter, pointing out that "escape of water" such as from broken or frozen pipes and roof tanks is the biggest single cause of home insurance claims.

"Quite apart from the damage and distress caused by water bringing down ceilings and ruining furnishings, it could still hit you in the pocket after insurance has covered the costs.  Although no-claims bonuses are less common on home insurance policies, if you have suffered a loss or made a claim then you will need to disclose this to your insurer.  It could well increase your premium the following year," he said.

Douglas also points to building repair costs as well as contents claims which are rising with inflation, and this in turn is leading to premium increases.

He said: "There has been a lot of focus on the sharp rises in car insurance premiums – yet over the past couple of years, the cost of insuring your home as been steadily rising too: and I believe they will continue to do so for the foreseeable future."   

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