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Contents Insurance and Home Insurances / Avoid premiums increase. What can be done? Save money and time by being informed. You would like to save money by comparisons?

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It has been found that buildings insurance increased on average by 1 - 2.5 % in Europe, in Great Britain for example just over £205. It the same with contents insurance, an increase between 1 and 3% each year. But within some of these mainstream insurers the increases of the price have been even more noticeable (example:  Norwich Union customers experiencing a premium increase of up to 6%). And there is the question why is this happening? Naturally premiums are going to increase more or less with inflation, but with all the competition out there, why are premiums going up and not down or stay where they are? To give more information, to understand the situation and to find a cheaper way the recent situation must be studied more in detail. Here are the influencing factors:

1. Recent cost of repairing and rebuilding houses: Building and labour materials increase each year, and therefore it in the same way the cost to the insurer when people make a buildings insurance claim. This cost inflation also affects the insurance companies' own operating costs as they have to pay the higher bills and more wages, and so on.. It can be expected that the  insurers will add on a little more to cover these costs.

2. There is the British weather: It is a fact that storms and especially floods, have been increasing in frequency. According to the association of British insurers the big flood damages in the last time causes huge waves in the insurance industry, with an average insurance claim of anywhere between £14,000 and £29,000. In the last two years we there have been some extremely destructive floods that have affected whole communities. An example is  Boscastle in Cornwall, or Carlisle, and also Helmsley in North Yorkshire. Millions of pounds have been the cost of these catastrophic floods to be paid by the  insurance industry. 

3. Also do not forget the burglary: The burglary claims have increased in value. The value is now in average at around £1,450. There exist two main reasons for this. The first one is that many people have houses full of the latest electronic technology (from Ipods to laptops, Playstation 2s and digital cameras and so on). These technical things are all expensive items and as far as the burglar is concerned, have a big resell value. Burglars can choose the most expensive things. The second is that Burglars often target well-off neighbourhoods  – with expensive items like jewellery in the house. By this reasons the  the value of the claim shoots up each year more.

With the wisdom of this information, the insurance companies base their quotations on other claims. The insurance choose quotations that have been made in the postcode area. For the case a particular problem with flooding or subsidence has occurred within your postcode area has been found, then you will pay a really loaded premium. It is the same  if a lot of your neighbours have suffered break-ins. In this case  you will suffer a higher premium because as far as the insurance company is concerned, you are more likely to make a claim to find the right insurance. 

If you choose a no-claims discount then it will help to offset the pressure of increasing premiums. But nevertheless after 5 years they cap your discount, and then it can no longer protect you from the general premium increases levied on their customers. Can you do anything  to escape these rising premiums?

Yes, you can. It is the easiest and the most effective to make sure you shop around for the cheapest deal. Especially then, when the policy comes up for renewal. We know, it is not much fun but it will only take half an hour or an hour of your time and you will no doubt find a cheaper quote than that of your recent insurance company which would like a renewal. Insurances companies know about this. If you apply online you often gets you an extra 10% discount, and paying by direct debit will also trim off a bit more of the sum. 

If you want to reduce your premiums there are other things you can do, for example home security. Insurers look kindly at the neighbourhood watch schemes. For the case you have security locks on your windows then a lot of the insurers give discount. Other things are external security lighting,  a burglar alarm and better locks on your external doors will also see your premiums go down. Yes, it is true it will cost you money to install these security devices. Nevertheless this things will also make your home less of a target to burglars. The neighbourhood watch scheme comes for no extra cost though. Think about the opportunities.

It is really a general rule, do not blindly accept you insurance company's renewal quotes. They try it with each client. Then they offer the best deals only to their new customers, not their loyal customers that have been with them for a long time. Do not avoid to save considerably by shopping around. Online brokers offer access to home insurance quotes, life cover, loans and much much more. 

23.02.2009