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Double digit increase in cost of home insurance

A row of housesHomeowners face rises in household insurance premiums of more than double the rate of inflation, a new report has warned.

Most insurers are likely to increase the prices of buildings and contents insurance premiums by between five and 10 per cent over the course of 2012.

This is the findings of a survey of Britain’s top insurers by advisory firm Deloitte*.

Spokesman James Rakow said that the actual increases are expected to be dictated by any extreme weather over the coming 12 months.

He said: “The outturn for 2012 will largely be determined by the weather.

"The storms that hit Britain in the first few days of January act as a reminder of the huge losses that natural perils such as storms and floods can produce.”

Here are some simple steps you can take to make sure you’ve got the right protection at the right price.

Find out when your policy is up for renewal

In most cases, the best time to search for a better deal is when your policy is due to be renewed. This happens once a year.

If you try to change provider before the year is up your current insurer may charge you a cancellation fee, perhaps of £20 to £30 or even more.

Unless your circumstances have changed dramatically and you are currently overinsured to a large degree, paying this charge is unlikely to be worthwhile.

If you have both contents and buildings insurance chances are the renewal dates will be the same, as you set up both policies when you moved into your present home.

In the weeks leading up to renewal, your insurer should send you a new quote for the next year.

This should prompt you to check you have the right level of cover. Use a price comparison service to see if any rivals offer a cheaper rate.

If you do nothing your insurer will probably automatically renew your cover at whatever premium it has quoted.

Get the right level of cover

Home insurance isn’t just about price, you also need to make sure you have enough cover.

If you don’t, your insurer could be within its rights to turn down a claim, or pay only a proportion.

Equally, if you’ve got more cover than you actually need, you could be wasting money.

For contents cover, go around each room in your home and calculate as carefully as you can how much it would cost to replace everything.

Most policies will have a high-value item limit where anything worth more than this (usually around £1,000 to £1,500) needs to be declared separately, and will probably push up your premiums.

For buildings insurance, use a re-build calculator to work out the right level of cover for your property based on its size and location.

The Association of British Insurers (ABI) has one on its website.

Maintain your home and keep it secure

Keeping your property in good working order and taking steps to prevent break-ins are both good ways of cutting insurance costs.

These precautions also reduce the chance you’ll have to claim.

Make sure your gutters are free of blockages and check you don’t have any leaking pipes.

Failing to do this means your insurer could turn down claims that are caused by these problems.

Fitting industry-approved locks to windows and doors can help reduce your premiums when you apply for a policy, but make sure the security measures you have tally with those listed on the application form.

If you make a mistake, or overstate how secure your home is, you could have a claim rejected.

Think twice before claiming

This final piece of advice might seem a bit odd, but it is worth thinking twice before you make a claim on your home insurance policy.

This applies especially if the amount of money you’re entitled to is relatively small.

On every claim, you’ll probably have to pay an excess.

This excess could be £100 or £200 so, if you’re claiming for accidental damage to a coffee table for example, what you receive from your insurer may not be very much.

As well as the excess, you need to think about the effect on your premiums in future as when you apply for cover as every insurer will ask about any claims you have made in the previous few years.

If you have made any claims, your premiums are likely to be higher because the insurer considers you a higher risk.

*A survey of the UK’s leading insurers was conducted by Deloitte, the business advisory firm, at its annual household insurance seminar, in December 2011.


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Chris Torney

Chris Torney

Chris is the former personal finance editor at the Daily Express. He's been a journalist for more than 10 years and contributes to a wide range of finance and business titles.Read more from Chris

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