Insurance is one of those things that no-one really likes paying for, so the latest news that premiums are actually falling is bound to be welcomed. Research from AA has found that the cost of both home and car insurance fell in the first three months of the year, meaning there's never been a better time to compare the options and get a better value deal.
According to the figures, the average premium for a new home insurance policy has dropped sharply again, continuing the trend witnessed since the end of 2011. The AA's latest British Insurance Premium Index shows that the average quote for a combined home buildings and contents insurance policy fell by 3.6% (or £6) to £158.66 in the first quarter of the year, while over the last 12 months, the typical quote for a combined policy fell by 9.6% (nearly £17).
This drop is larger than expected, and analysis suggests that it's reflective of a longer period of benign weather, with fewer storms resulting in a reduction in claims – and a subsequent reduction in premiums as insurers are able to comfortably absorb the costs. The desire to compete has also fuelled these price cuts, so why not take advantage of the market?
Janet Connor, managing director of AA Insurance, commented: "Home premiums are most likely to be affected by extremes of weather, and the recent winter has, on the whole, been notable for its lack of heavy rain, snow, winds and extreme temperatures. The fact is, claims over the past three years have been well within insurers' capacity, and as a result, premiums have fallen.
"I would not have expected premiums to have fallen by so much but insurers are competing for market share by offering introductory discounts, so this is great news for consumers. But, bear in mind that the averages do hide regional differences, and those homes most at risk of flooding will be paying higher-than-average premiums. Nonetheless, the cost of insuring your home for a year can be less than the cost of filling a car's fuel tank. That has to be a bargain."
It isn't just home insurance premiums that have fallen, either – the cost of insuring your car has fallen, too! The AA British Insurance Premium Index has revealed that the average quoted premium for a typical comprehensive car insurance policy fell by 1% (equating to £5.58) in the first quarter of the year, with the average annual premium now standing at £530.47.
This compares with a rise of 0.2% in the last quarter of 2014 and of 1.2% over the three months ending 30 September, but over the last 12 months, premiums have fallen by 5.8% (down from £563.27 this time last year). Younger drivers have benefited the most, with the 23-29 age group seeing the biggest fall in premiums – down by 3.4% in the quarter and by 9.3% over the year, it results in an average quoted premium of £652.61. Even the youngest drivers (those aged 17-22) benefited from a drop of 0.6% this quarter and of 6.4% over the year, with the typical premium now standing at £1,207.61.
However, although welcome, this trend may not be with us for long. Janet Connor pointed out that the first quarter of the year often sees insurers offering price reductions to build market share, as more policies are sold due to the increase in new vehicle registrations. It's therefore predicted that premiums will rise for the rest of 2015, a trend that's already being seen among older drivers, but "the rate of increase isn't going to be turbo-charged... We're starting to see insurers quoting higher prices and I think that's the beginning of a trend, but the market remains very competitive".
So why not take advantage? If you're approaching your renewal date it's a great time to consider your options, so compare car insurance quotes to see if you can cut your payments down to size – and if you combine that with lower home insurance premiums, you could save even more!
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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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