Home insurers apply “modest” premium increases

by Gill Montia

Story link: Home insurers apply “modest” premium increases

With flood warnings once again in force across central England, the AA has assessed the cost of last summer’s flooding in Yorkshire and Gloucestershire at £750 million worth of claims on residential property.

John Close, insurance relations director at the AA, calculates that the average cost of a claim approached £52,000.

As a result, home insurance premiums have been rising with quotations for buildings cover increasing 1.4% in last three months of 2007.

The average cost of contents cover increased by 0.4% during the same period.

The figures come from a quarterly index, in which the AA surveys the cost of policies from 37 brokers and insurers and takes into account 750 different types of home and location.

The average quoted annual premium for buildings cover now stands at £218.60, the highest level since the index began in 1994. The cost of contents cover averages out at £150.57.

However, Mr Close is “surprised that premiums have risen so little over the past quarter”, given the scale of last year’s claims.

The AA index also shows that homeowners who shopped around for cover could have paid less in premiums than if they had taken out a policy earlier in the year.

An average of the lowest three quotes for buildings cover fell by 1.1% to £145.66, while that for contents insurance the average lowest annual premium dropped by 2.8%, to £82.56.