Home Insurance Premiums Continue to Rise

There has been no let-up for struggling homeowners as the AA British Insurance Premium Index reveals that home insurance premiums have risen for the eighth successive quarter.

This time, premiums on buildings insurance have increased by an average of 50p taking it to a new high of £218.53. This means that over the last 12 months, the average cost of buildings insurance has increased by eight per cent - the biggest leap since records began in 1994.

There are a number of reasons why premiums have continued on this upward trend. Though house prices have fallen, the cost of rebuilding homes and repairing them has increased. This has been escalated by a harsh winter which saw a surge in claims for buildings that had been damaged by snow and ice.

Average contents insurance premiums rose even more sharply - increasing by more than £3 to £126.34. Much of this rise is blamed on the increase in domestic burglaries since the recession - home thefts are reported to have risen by around four per cent. There have also been a record number of fraudulent claims with the industry detecting 55,000 last year.

Despite the increases, home insurance remains relatively cheap as long as you know where to look for it.

Many consumers fall into the trap of renewing their policy year after year with the same insurer regardless of renewal quote increases. This is a costly mistake as the majority of home insurance providers offer their cheapest deals exclusively to new customers with discounts for shopping online.

So at renewal time, property owners should shop around for home insurance. According to the AA British Insurance Premium Index, the average quoted premium for buildings insurance drops by more than £90 to £127.82, while the average quoted contents premium falls by more than £50 to £70.40 among those who compare at least three quotes.