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Home insurance costs fall but are artificially low

Home insurance costs fall but are artificially low

Category: Home insurance

Updated: 26/10/2015
First Published: 26/10/2015

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 It is now over 6 months old so the content may be out of date.

How much do you pay for your home insurance? According to research from the AA, it could be less than it has been in recent years, but don't get too complacent – these premiums are "artificially low", says the insurer, and there are concerns that they'll soon ramp up.

The figures, from the AA's latest British Insurance Premium Index, shows that the average Shoparound quoted premiums for buildings, contents and combined policies all fell over the three months ending 30 September 2015, which continues the "fairly steady downward trend" that began at the end of 2012.

Breaking it down, we can see that the average quote for buildings policies fell by 1.4% in the last quarter to £107.39 (down 3.1% over the year), while quotes for contents policies fell by 2.1% to £60.00 (down 5.6% over the year) and combined buildings and contents policies dropped by 2.4% to £149.30 (down 6.3% over the year).

However, despite the current trend being welcome news for customers, there are concerns that claims costs will soon exceed insurers' premium income – which would mean that quotes will inevitably rise.

"The past couple of years have seen very few serious weather claims – mild winters and little serious flooding or property-damaging storms," said Janet Connor, managing director of AA Insurance. "That has led to the continuing easing of premiums as competitive pressure builds."

However, she warns that this cannot be maintained, as some weather forecasters suggest that the coming winter could be particularly harsh, which would result in severe weather claims. "If that happens, then equally sharp home premium increases can be expected," she added.

One of the best ways to protect yourself from the winter weather (and the potential home insurance claims that could ensue) is to make sure that you thoroughly winter-proof your home. You can find a few tips on how to do that here, but after that, make sure to be absolutely certain that your home insurance policy meets your needs. If not, or if it's time to renew, compare the options and see if you can get a better deal, and hopefully you'll avoid the predicted price hikes for another year.

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.