Home insurance Updated:
Over the last year or so, homeowners have been enjoying a gradual fall in the cost of their home insurance policies: indeed, according to research carried out by Consumer Intelligence, the price of the five most competitive policies has fallen by 12.9% since February 2014.
However, the good times could be drawing to a close as the effects of the Government's updated Insurance Premium Tax begins to make itself known.
The latest findings by Consumer Intelligence have revealed that in the year to September, the average cost of home cover continued to reduce, being down by 5.8% to a typical price of just £114. Over-50s enjoy the lowest premiums, which average around £106, while those under the age of 50 pay around £122 per year.
This has been attributed to a reduction in the number of burglaries, as well as falling claims numbers for flood and storm damage thanks to milder weather conditions. However, the pace of these falls has been slowing: in the three months to September, prices only fell by 1.7%.
This slowdown is expected to continue and even reverse thanks to the Government's changes to the Insurance Premium Tax (IPT). On 1 November, the cost of this tax increased from 6% to 9.5%, which will impact the cost of things like motor insurance, buildings insurance, pet insurance and, of course, home insurance. As a result, it is widely anticipated that the trend of shrinking premium prices will be "blown off course" and result in a new upward climb in terms of prices. This means that when customers come to renew their policies, they could be faced with much higher premiums.
Unsurprisingly, with premiums likely to take a bigger hit on household budgets, 27% of respondents said that they will cancel their policies or reduce their cover when its time to renew. However, dropping the level of protection or even removing it altogether could put you in a precarious, and costly, position if something were to go wrong.
To keep the cost of your premiums in budget while still benefiting from the protection you need, shop around for a better deal. Make sure you know when your policy is due for renewal and then scour the market, and look closely at what each provider is willing to cover you for: a cheap premium may be tempting, but it could have a high excess or a limited amount of cover.
If you're unsure where to start, check out our home insurance comparison tool.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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