Good news – insurance premiums are falling! - Insurance - News - Moneyfacts

News

Good news – insurance premiums are falling!

Good news – insurance premiums are falling!

Category: Insurance

Updated: 21/04/2015
First Published: 21/04/2015

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

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.

Cheaper home insurance

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."

Insure your car for less

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!

What next?

Compare car insurance

Compare home insurance

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.

Related Articles

Insurance premiums set to rise even more

One of the most unwelcome aspects of yesterday’s Autumn Statement was the rise in Insurance Premium Tax – it’ll be the third time it’s risen in little more than 18 months – and unfortunately, it means insurance premiums are set to rise even further.

Don’t be left in the dark by daylight savings

The clocks go back this weekend and the nights will start to draw in, which means winter is well and truly on its way. Unfortunately, it also means that homes could be left vulnerable, with opportunistic thieves taking advantage.

£2,833: the cost of a burglary

A while ago, a local newspaper featured a story of a burglary that saw thieves come in through the attic – an unusual sight. What most stories on burglary don’t feature, however, is the cost to the victims: a £2,833 bill.
 
Close