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Home & Contents insurance has been becoming more expensive year on year, this article discusses the reasons why, and seeks to find ways to break the cycle.
Home and Contents Insurance - Why premiums are on the increase
Author: Anna Richardson
In 2005, Buildings Insurance increased
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So why is this happening? Naturally premiums are going to increase with ( motor insurance ) inflation, but with all the competition out there, why are premiums going up and not down?
Let's study the situation in detail.
The cost of repairing and rebuilding houses
Labour and building materials increase every year, and therefore so does the cost to the insurer when people make a buildings insurance claim. Cost inflation also affects ( secured loans ) the insurance companies' own operating costs as they have to pay higher bills, more wages etc. It's to be expected that insurers will add on a little extra to cover these issues!
The British weather
Michael Fish got it wrong that infamous day the hurricane hit, but even though that storm came from the blue, it is a fact that storms, especially floods, have been increasing in ( life insurance quotes ) frequency. According to the Association of British Insurers, flood damage causes huge waves in the insurance industry, with an average insurance claim of anywhere between £15,000 and £30,000. In the last 18 months we there have been some extremely destructive floods that have affected whole communities, namely Boscastle in Cornwall, Carlisle, and Helmsley in North Yorkshire. Those catastrophic floods will have the cost the insurance industry millions of pounds.
Burglary
Burglary claims have increased in value, and now average at around £1,400. There are 2 main reasons for this:
• Many people have houses full of the latest electronic technology - from Ipods to laptops, Playstation 2s and digital cameras. These are all expensive items and as far as the burglar is concerned, have a high resell value. Burglars find themselves spoilt for choice!
• Burglars often target well-off neighbourhoods - with expensive items like jewellery in the house, the value of the claim shoots up.
In light of this information, the insurance companies base their quotations on other claims that have been made in the postcode area. If a particular problem with flooding or subsidence has occurred within your postcode area, then you will pay a loaded premium. Similarly, if a lot of your neighbours have suffered break-ins, then you will suffer a higher premium because as far as the insurance company is concerned, you are more likely to make a claim.