Home Insurance Premiums Stop Falling

by Richard Kilner

Story link: Home Insurance Premiums Stop Falling

Recently home insurance premiums have shown a pattern of falling but following the summer floods and subsequent large increase in claims this has come to a sudden halt according to the AA’s British Insurance Premium Index.

The insurance premium for home buildings have increased by 3% in the last quarter, the largest increase since 1994 when the Index was created. Home contents premium rose by more than 2% during the same period.

The AA believe that six months of claims caused by the extreme levels of rainfall during the summer are to blame for the rise in premiums and the ending of a downward trend of home insurance premium costs.

The Insurer Relations Director at AA Insurance John Close explained that drying out homes, repairing damaged houses and temporary accommodation for the claimants have all played a role in the increase, although the 15% rise forecast by some has been shown to be overly pessimistic.

Close added that although premiums would continue to rise they will remain affordable as competitive pressures force companies to keep their premiums as low as realistically possible. Those who previously had not taken out contents insurance were now more likely to do so following the floods.

He also indicated that although prices had risen of late they had in fact increased by less than 5% since 1994, when the Index began, compared to motor insurance which has been rising steadily since the second quarter of 2006.

Close backs the Transport Select Committee’s proposal to increase the age at which a full driving licence can be acquired to 18 as he believes it will help stop the number of accidents caused by young drivers. He also wants the national curriculum to include lessons about driving responsibly.

Male drivers under 21 and ten times more likely female drivers under 21 are five times more likely to be killed or seriously injured in an accident compared to drivers over 35.