Home insurance prices fall despite claims costs

Terraced houses

Home insurance prices are cheaper than they were a year ago despite premiums increasing in recent months, according to analysis by Consumer Intelligence.

In the year to October, the average cost of home insurance dropped 0.4% to £137 – a reduction that Consumer Intelligence attributes to increased competition.

However, weather-related claims costs from last winter have driven a 1.2% increase in prices during the last three months and prices may yet rise further.

Changes over the last year are relatively modest compared to the 8.5% increase in the cost of home insurance that Consumer Intelligence found in the year to October 2017 last autumn.

The biggest drop in prices were to be found in Wales and the North East. After price reductions of 4.3% and 2.6% respectively, average annual bills in both regions stand at £124 – the cheapest in the country.

Only homeowners in London and the East Midlands are paying higher average prices than they were last year. Premiums in the capital rose 2.8% to £183 – the most expensive in the country – while East Midlands prices rose 1.7% to £130.

The geographic disparity in the cost of home insurance has grown in the last year. Londoners pay 48% more a year than those in Wales and the North East, compared to 41% more than those in the North East and South West last year.

As you might expect, the age of properties is also a major factor in prices, with a 32% difference between the average annual bills for the newest and oldest homes. Customers with properties built before 1895 pay on average £162, while those with homes built after 2000 pay £121.

John Blevins, a pricing expert at Consumer Intelligence said: “Over the past 12 months claims costs have been the largest driver of rates and they have been dictated by the weather and the increases in escape of water claims.

“London continues to see the highest rate increases with crime rates and specifically burglary generally having a larger impact in urban areas. These crimes however are reducing as home security technology is getting better and more accessible.

“The last three months have seen an overall slight rise in premiums as claims costs from earlier in the year come through but generally pricing for buildings and contents combined policies remain fairly static as this is still a very competitive marketplace.”

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