The cost of the cheapest available home insurance policies has risen over the past year, according to new figures – meaning those who prioritise value may end up paying more when they need to renew.
The average cost of the five cheapest policies on the market at any one time has risen by 4.1 per cent over the last 12 months, according to the Consumer Intelligence Home Insurance Price Index.
Britons living in the North East were subject to the biggest hikes year-on-year, with the cheapest home insurance premiums rising by 6.7 per cent in that area of the country.
The Consumer Intelligence insurance index tracked the average premium of the five most competitive home and contents policies, and found they went up 4.1% over a 12-month period
The cheapest available premiums in Wales rose by 5.1 per cent year-on-year whilst those in the East Midlands typically saw a 5 per cent rise.
The index, which tracks the average premiums of the five most competitive home and contents policies available, showed that the majority of the uplift came earlier in the year.
The hikes were linked to the Financial Conduct Authority’s ban on ‘price walking’, which came into force in January 2022 and initially led to higher premiums for both new customers and renewals.
Price walking is when an insurance company continually increases prices on renewal for loyal customers, while offering better deals to those signing up for the first time.
Since the surge in prices during the first half of the year, average premiums across have actually been falling according to the Index, going down by 7.6 per cent.
However, according to Harriet Devonald, product manager at Consumer Intelligence, prices are starting to rise once again.
| Area | October 2021 – October 2022 |
|---|---|
| UK | 4.10% |
| North East | 6.70% |
| Wales | 5.10% |
| East Midlands | 5.00% |
| South East | 5.00% |
| London | 4.80% |
| West Midlands | 4.20% |
| South West | 4.10% |
| Eastern | 3.70% |
| Scotland | 3.40% |
| North West | 2.40% |
| Yorkshire and The Humber | 2.40% |
She said: ‘We’re beginning to see prices rise in the competitive end of the market.
‘Insurers like the popular app-based Getsafe, which had been driving prices down all summer, increased their premiums in October.’
London postcodes continue to dominate the most expensive areas for home insurance with Londoners paying on average £185 for an annual buildings and contents policy, albeit based on the five most competitive deals available.
The next most expensive area is the South East, where the average premium costs £141, while the cheapest regions are the North East, East Midlands and the West Midlands.
Newer-build properties, built since 2000, remain the cheapest to insure – at £124 for an annual policy, based on the five most competitive deals available.
Older homes continue to be the most expensive to insure, with Victorian-era homes built between 1850 and 1895 attracting the highest home insurance costs at £166.
The age of a person now makes little difference to the cost of home insurance, the research found. Just £5 separates the annual cost of home insurance for the under-50s (£138) and the over-50s (£133).
How can you cut the cost of buildings insurance?
Price is not the only factor to consider when it comes to buildings insurance, and those looking for a new policy should read the small print carefully to ensure it covers everything they need it to.
However, there are often savings to be made by switching provider. Often it may seem like the easiest and quickest option to stick with your existing insurer when the time comes to renew.
However, it’s vital to shop around in advance of the renewal date to see if there is a cheaper alternative.
Comparison sites such as Compare The Market, MoneySuperMarket and Confused.com are good places to do this.
Much of the rises this year were linked to the Financial Conduct Authority’s ban on ‘price walking’, which came into force in January 2022
Alternatively you can contact insurers directly, or speak to an insurance broker through the British Insurance Brokers’ Association (Biba).
You also need to consider the level of cover you need. It may be that you are paying extra for legal services cover or accidental damage, for example, so work out whether this is something you actually require.
Paying a higher excess will typically reduce the price of your premium. The excess is the amount you are obligated to pay were you to make a claim.
For example, if your excess is £200 and your claim is worth £1,000, you’ll pay £200 and your insurer will pay £800.
Another element is accurately calculating the value of your possessions and an accurate rebuild cost for your home.
Rebuild cost is different from the market value of the property, and is usually lower.
The rebuild cost can be worked out by using the BCIS rebuilding cost calculator.
For those combining building and contents insurance it will also mean not overestimating the value of your possessions.
However, it’s worth remembering that if you underestimate the rebuild cost or the value of your possessions, you will not be adequately covered in the worst case scenario.
Other than that, maintaining a no claims discount can help keep costs down. Home insurance policies typically allow you to build a no claims discount for a period of up to five years.
Finally, in some cases, paying for the policy in one go, rather than spreading it monthly, can help to reduce the cost.
***
Read more at DailyMail.co.uk