Home insurance Updated:
If you're about to renew your home insurance policy, you could be in for a shock, as new figures from Consumer Intelligence show that home insurance costs have climbed sharply in the past three months – and it's all thanks to the hike in insurance premium tax (IPT).
The figures show that average premiums rose by 3.1% in the last three months to an average of £119, which is a direct result of the tax increase that took effect in November. The change, which saw IPT rise from 6% to 9.5%, was largely expected to boost premiums for home, motor, breakdown, buildings, pet, private medical and mobile insurance, and it looks as though it's already taking its toll.
Providers appear to be passing the cost of this tax hike directly onto the consumer, as has already been seen in the case of car insurance, so it's no wonder it's had such a swift impact on home insurance premiums. Its instant effects have reversed years of price falls, which won't come as welcome news to those hoping to keep their budgets in check.
Not only that, but recent storm and flood damage – the costs of which are expected to exceed £1.5bn – could put further pressure on the cost of premiums, which means prices could rise even further in the months to come.
There's slightly good news in the finding that, thanks to previous price falls, average premiums are 0.8% lower than they were a year ago and 9.5% lower than in 2014, but if the pace of increases continues to pick up, this may not be the case for much longer.
"Unfortunately the only way is up for home premiums following years of price cuts driven by a big reduction in burglaries and fewer claims for flood and storm damage thanks to recent milder weather," said Ian Hughes, chief executive of Consumer Intelligence. "The rise in insurance premium tax has reversed the trend dramatically with a sharp rise in the past three months.
"The recent series of storms and floods with claims of up to £1.5 billion expected will add to the pressure. That makes shopping around for home insurance and haggling with your existing insurer even more important to ensure your premium remains as competitive as possible."
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 Any products featured may be withdrawn by their provider or changed at any time.
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