Why are home insurance costs rising?

Thunderstorm over HouseRecent figures from Britain’s biggest mortgage lender suggest that the housing market has stagnated and property prices are cooling across the country and falling in the capital. To make matters worse homeowners are being hit by higher insurance costs as premiums rise by the fastest rate in three years.

The cost of home insurance has risen by 7% in the past year which is more than double the rate of inflation. The average Buildings & Contents policy now costs £131, which is a small price to safeguard your most valuable assets, but homeowners are rightly asking what’s pushing-up premiums? 

Much of the blame is being pinned-on the government raising the level of Insurance Premium Tax (IPT) twice in the past 12 months, but it’s not the only reason. IPT was increased from 9.5% to 10% last October and to 12% in June, as a result the industry has called for a freeze on IPT.

It’s also thought that Brexit might be part of the problem, but not for the reasons you might think. The decision to leave the EU has weakened the price of the pound, which means that it’s more expensive to import building materials for repairs, and more expensive to service insurance claims.

The question mark hanging over the country’s financial future has impacted the property market and more homeowners are staying-put and making the most out of what they have got. An increase in renovations and botched DIY jobs has led to a rise in home insurance claims with escaped water caused by burst pipes being the single biggest culprit.

The research carried out by Consumer Intelligence revealed interesting details about how people are being hit by the price hike. Demographically the over 50s can expect the biggest increases, geographically Londoners are paying proportionately higher, and owners of properties built before the millennium can expect higher premiums than new builds.

The good news is that the home insurance sector is incredibly competitive and policies aren’t predicted to rise any further. It’s also worth noting that home insurance cover is still significantly cheaper than it was a decade ago.

At Quoteline Direct we are here to make sure that your home insurance costs don’t go through the roof. We have got access to a wide panel of competitive providers and can guarantee to beat your current home insurance renewal premiums by at least 10% and hopefully a lot more (based on like for like cover). To find out more, or to get a quick quote, visit the Home Insurance section of our website.

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