Cost of home insurance dips
Written on 2 November 2015
The average cost of insuring your home is now cheaper than a year ago, according to figures from the Association of British Insurers (ABI). The average annual premium for a joint buildings and contents policy is now £290 (£5.58 a week) compared with £296 for the same quarter last year.
Separate buildings and contents policies
Around three quarters of people who buy household buildings and contents insurance buy a combined policy. But for those who buy buildings only insurance average premiums are now down 7% compared with a year ago at £226 or £4.35 a week. While the average contents only insurance policy is 6.8% cheaper than a year ago at £121 or £2.33 a week.
Insurance Premium Tax
But while premiums may have gone down, Insurance Premium Tax (IPT) (that’s a tax you pay on certain types of insurance policies) has just risen from 6% to 9.5%. If this extra cost is passed on to consumers, it will add more than £10 onto the price of the average buildings and contents insurance policy, says the ABI.
This would more than cancel out the dip in prices since last year and will push up prices, says Mark Shepherd, the ABI’s general insurance manager.
“UK consumers benefit from a very competitive home insurance market which helps to ensure affordability, but the imminent increase in Insurance Premium Tax from November is set to push up premiums for customers buying home insurance,” he said.
Cutting the cost of home insurance
There are several things you can do to keep down the cost of your home insurance. Here’s what the ABI suggests:
1. Shop around. Don’t just accept your current insurance provider’s renewal quote, compare quotes from different insurers. Contact insurers directly, speak to an insurance broker (you can find one on the British Insurance Brokers’ Association website or use a price comparison website.
2. Don’t over-insure. Your insurer may offer you additional cover, such as protection against accidental damage, but your standard policy might cover everything you need so don’t pay for unnecessary extras.
3. Consider combining buildings and contents insurance – you may be offered a discount. But also check out individual cover as buying separate polices from different companies may work out cheaper.
4. Secure your home. Many insurers offer discounts if you have security devices such as burglar and smoke alarms and high-quality window and door locks.
5. Consider paying a higher excess. Your insurer may cut the cost of your premium if you agree to pay a higher excess (that is the first amount of any claim that you must pay).
6. Pay your premium in one go. Discounts are often available if you pay your annual premium upfront rather than in monthly instalments.
7. Maintain your no-claims discount. Insurers usually offer discounts to customers who haven’t claimed against their insurance for a certain period of time. Take steps such as insulating your pipes and water tanks to prevent freezing in cold weather and installing proper security devices to avoid making a claim.
8. Work out the exact value of your contents. It’s worth spending time doing this because if you overestimate this value your premium will be higher than necessary. If you underestimate this figure you will not be adequately covered if you have to make a claim.
More on home insurance
Our guide on home insurance has more useful information about buying cover for your home. And to find out more about how you might be affected by the rise in Insurance Premium Tax, take a look at our article, Millions to be affected by higher insurance premiums.