Last year the UK's average premium for Buildings Insurance
increased by 1% to just over £205 and the average for Contents
Insurance rose to £151, up 2%. But within the market we've seen
some much bigger rises - if you're with Norwich Union you'll
have seen your premium rise by around 6%.
So what's going on? Every year we see premiums rising. Surely
with so much competition in the home insurance market, you
wouldn't expect to see such inexorable rises in premiums?
Let's consider the situation more carefully.
The cost of repairing and rebuilding houses is a reflection of
the rising price of labour and building materials. This means
that cost to the insurers of claims under the buildings cover
similarly rises. So as their costs rise, so do your premiums.
And there's also the indisputable fact that cost inflation also
affects the insurance companies own operating costs. Wherever
possible, they're bound to add a little extra on for that!
Then there's that lovely British weather. Michael Fish could be
forgiven for believing we don't live in a hurricane zone, but
nevertheless it's a fact that storms, and especially floods, are
becoming ever more frequent. Flood damage can be particularly
destructive with, according to the Association of British
Insurers, the average insurance claim ranging between £15,000
and £30,000. And during the last 18 months we have seen
particularly destructive floods create headline news at Helmsley
in North Yorkshire, Carlisle, and Boscastle in Cornwall. Those
events must have cost the insurance companies multi-millions.
The other area where costs have been rising is burglary. The
average burglary claim has now risen to around £1,400. There
seem to be two reasons - firstly burglars are finding pickings
easier to come by and move on. Modern family homes are packed
with valuable electronic gismos - from laptops to I pods,
digital cameras and flat screen TV's. The other reason is that
burglars are targeting well-off neighbourhoods more and more.
Against this background the insurance companies are able to
price home and contents insurance down to individual postcodes.
If their records show a problem with flooding, or subsidence, or
an increasing incidence of burglary in you immediate area, their
computers will load your premium to reflect the additional risk.
Your no-claims discount will only serve to offset these upward
pressures to a certain extent. And don't forget that once you
have a five years no-claims record, your discount doesn't
increase, it's capped. Thereafter, all the premium increases
will land fully in your lap.
So what can you do to save money?
The most important step by far, is to shop around every year for
the best available deal. Maybe it's a chore, but thirty or forty
minutes on the Internet (including ten minutes on this web
site!) will yield you results. Within that space of time you'll
have found the cheapest insurer and, as an online customer,
you'll probably have qualified for an additional 10% discount.
Then you can always agree to pay by direct debit - that'll also
trim off a bit more.
Of course there are other things you can do, especially in the
arena of home security. Join the local neighbourhood watch
scheme, install security locks on your windows, fit external
security lighting, up-grade the locks on your doors and get a
burglar alarm. Added security will earn you discounts on your
insurance but will cost you money to install! Perhaps the added
peace of mind alone will be worth the cost. Only the local
neighbourhood watch scheme arrives free!
The best general rule is don't stick with the same insurance
company too long. Keep them on their toes. They have a tendency
to take loyal customers for granted. Yes, it really does pay to
shop around - try it and prove it to yourself!
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