Home premiums steadily rising

The Shoparound index, which is an average of the cheapest three premium quotes returned from a range of insurers for each ‘customer’ in a nationwide basket of risks, show that the average quote for annual buildings, contents and for combined policies rose by up to 11% over 2011.

Over the last three months of 2011:

- Buildings premiums rose 3.1% to £156.95 (from £152.18), an annual increase of 9.5% (from £143.36)

- Contents premiums rose 4.4% to £80.58 (from £77.21), an annual increase of 11.2% (from £72.43)

- Combined buildings and contents premiums rose 2.9% (from £211.49), an annual increase of 5.6% (from £200.25)

Simon Douglas, director of AA Insurance, said:

“Storm damage, flooding and burst pipes are top of insurers’ list of worries, following two harsh winters and increasingly frequent severe weather.

“In addition, economic pressures result in more theft claims. According to the British Crime Survey, domestic burglary in England and Wales grew by 10 per cent over the 12 months to the end of June 2011.

“The premium increases we have seen over 2011 reflect both past losses and concern about future claims.”

Mr Douglas believes that premiums will continue to rise through 2012, but not sharply.

He said:

“I expect that by this time next year, home premiums will have risen by somewhere between 5% and 10% he added, pointing out that historically, home premiums have been static.  

“For example, between 1994 when the AA started tracking home premiums and January 2009, the average quoted premium for a contents policy had risen by less than 1% while buildings had risen by less than 8%: that compares with more than 100 per cent increase for a car policy over the same period.

“Home insurance still represents good value.”