Whilst home insurance isn’t a legal requirement in the same way that car insurance is, it is sensible to take it out if you own or rent a home.
Whether you take out a combined buildings and contents policy, a buildings only policy or contents only policy, you will want to get the right cover for your needs at the best possible price.
We look at news of an increase in home insurance premiums over recent years, why these rises have been happening and what you can do to manage your home insurance costs.
What is the average rise in home insurance premiums in the last few years?
There are many sources which cite increases in home insurance premiums from 2019 to 2020.
Data from Consumer Intelligence released on the 20th Feb suggests that home insurance premiums have risen 2.9% in the past 6 months.
Whilst data from Moneysupermarket suggest a rise of 25% between 2016-2019 when looking at combined home insurance policies (buildings and contents) from an average of £115 to £145.
So, it seems fair to say that there has been an increase in home insurance premiums in recent years.
Why have home insurance premiums increased?
The most commonly cited reason behind this increase in home insurance premiums is the weather. The increasing severity and frequency of storm events. We experienced both Storm Ciara and Storm Dennis on consecutive weekends this February for example. Both of which brought with them high winds and heavy rainfall. Leading to flooding and general storm damage resulting in more home insurance claims.
Another factor that may be affecting home insurance premium prices is the increase in expensive items within the home and the fact that homes today are increasingly connected. The average home has a lot more devices and expensive items – from tablets, TVs, to expensive lighting solutions and kitchens. This means items in the home are getting more expensive to fix or replace. Many of the items are also attractive to thieves so may be the things to be taken if you do unfortunately suffer a break-in.
It is also thought that premiums and the home insurance market in general had seen prices reduce in prior years due to a very competitive environment. And with an increase in claims for things like flooding, prices have had to rise to account for the increased costs which insurers are facing.
Will home insurance premiums continue to increase at this rate?
It is of course difficult to say exactly how premiums will change in coming years and how fast they could rise or fall. But we would suggest that given the factors above, it is likely that premiums will remain at a higher level than seen in previous years.
Insurers will need to continue to factor the impacts of climate change into the pricing of covers such as home insurance.
If we continue to experience weather events, which inevitably result in more claims, insurers will need to ensure that they can cover these claims costs.
As well as storms and flooding, climate change could also result in:
- Droughts in the summer months which can increases claims for things such as subsidence
- Colder weather in the winter months. Leading to more claims for burst pipes and associated water damage.
Insurers also need to account for the increasingly expensive nature of the items within the everyday household. As their costs of replacing items increases, unfortunately so do home insurance premiums.
How can you manage your home insurance premium costs?
There are many ways in which you can look to manage your home insurance premiums, including:
Consider your home security – something we have blogged about before, but home security is an important consideration. Lighting, security systems, burglar alarms, CCTV, the type and strength of locks on doors and windows can all help minimise how attractive your home looks to thieves. Some insurers may ask for details of your security measures and may provide discounts for having certain things in place. So, it’s best to check with your insurer/broker before installing expensive solutions.
Take out the right level of insurance for your needs – taking out the right level of insurance is important. If you over insure you could be paying more than necessary. Take the time to calculate the value of your contents (you can make use of our home contents calculator for this). And take out the right level of buildings cover – you need enough to cover the rebuild value, not the purchase/market value.
But make sure you don’t under insure! Whilst it may save money in the short term, if you do need to make a claim you could find yourself in a difficult position.
Build up a no claims discount – if you do not claim on your policy you will build up a number of no claims years. Many insurers will then offer a discount based on how many years you have not claimed for.
Work with a broker – A broker such as Anthony Jones, work with a wide range of insurers and understand the market as well as your needs and requirements. This means they can look for the best product for you.
At Anthony Jones we can work to organise home insurance for you as well as high net worth insurance for those who may have more expensive items that they need to insure. You can complete our home insurance quote form online and a member of our team will get in touch with you as soon as possible to discuss your needs.