The cost of home insurance is not that onerous and, on average, should only be costing around £0.45 per day. However, there are some householders who face much larger premiums and could benefit from some advice on how to slash this cost.
In this feature, we take a look at the average home insurance costs in the UK along with those factors which influence these premiums. We also give you some advice about how to save money on your home insurance.
What is the Cost of Home Insurance in the UK?
According to recent statistics issued by the AA British Insurers Premium Index, the average cost of a combined buildings and contents policy is £163.38 per year.
Buying your insurance premiums separately will cost you slightly more with the current average prices being reported as follows:
- £59.77 – Average cost of Contents Insurance.
- £119.22 – Average cost of Buildings Insurance.
This figure has been rising steadily since 2014 but is lower than the peak that prices reached in 2010-2011.
As can be seen from the chart below, costs for contents insurance (2018 vs 1994) are pretty much unchanged; however, buildings insurance costs have risen on the index by around 40%.
What Factors Affect the Cost of a Home Insurance Policy?
There are lots of reasons why homeowners can face a rise in premiums or pay out additional sums on their policy. Some of these factors are under our control to change whilst others relate to elements which are not.
Factors that can affect the cost of your home insurance include:
- Working from home – Having contents in your home that are deemed ‘commercial’ can increase your insurance premiums. This can be particularly true if you run a business from home where customers visit you (such as counselling, sports massage therapy, chiropody etc.).
- Claims History – Homeowners that have a no-claims record can expect to receive a discount to reward them for this status or, at very least, not to be penalised for it. By contrast, those property owners who have a history of frequent claims will see a significant difference in their insurance costs.
- Listed Buildings – If your home is classed as Grade I or Grade II listed then you may need specialist insurance.
- Flood Risk Areas – Homes that have experienced flood damage in the past, or are deemed ‘At Risk of Flooding’, can attract significantly higher premiums.
- Crime Rates – Just as areas at risk of flood can push up the price of a home insurance policy, the local crime rates can also impact on the price of your premium.
- Age, Size and Construction of Property – This is one of the prime ways that building’s insurance premiums are calculated and if you have a thatched cottage or timber framed building then this will increase your insurance costs. Likewise, the size of your home will play an important factor in the pricing of your policy.
- Security – Homeowners that have a proactive approach to security and have installed industry approved burglar alarms or CCTV can see savings on their home insurance premiums.
- Lifestyle – Properties that are left unoccupied for long periods of time are more vulnerable than those that aren’t. Likewise, insurance premiums are built around the composition of your family (whether you have children and pets), your age and other lifestyle factors such as if you are a smoker. All of these elements have a risk rating and are applied to your premium.
- Value of Contents – The average UK householder is estimated to own a total of £35,000 worth of ‘stuff’. If your home contains high-value items such as art, jewellery or tech-equipment (and this is disclosed) then your contents insurance will reflect this.
How to Save Money on Your Home Insurance
According to the Association of British Insurers (ABI), the most common claims made on home insurance policies for 2017 were:
- Water Damage
- Storm Damage
- Accidental Damage
- Fire Damage
By taking a proactive attitude towards risks that can affect your claims history with your insurer, you can help reduce the cost of your home insurance. At very least, you can help prevent a claim from arising in the first place and therefore protect any no-claims discount you may be entitled to.
Keep Your Home Well Maintained
We’re going to start with some important advice that is often overlooked by policy holders when it comes to their role as the owner of a property.
All home insurance policies will stipulate somewhere in their terms and conditions that insured properties must be well-maintained. This means that reasonable measures must be taken to maintain the integrity of the structure of your property. Failure to do so could leave your policy invalidated in the event of a claim being made.
The most common example of this working in practice is claims being made against damp. If an inspection by an insurer’s loss adjusters finds that the cause of penetrating damp is a result of a broken downpipe or guttering then they are unlikely to pay out as a result.
Keep your property safe from the elements by regularly inspecting your home for tell-tale signs of wear and tear as well as any recent damage from things like storms or accidents. You don’t need to employ a surveyor to do this, a simple visual inspection every so often should suffice. And, if you see something that needs fixing don’t put it off until ‘tomorrow’.
Keep Your Home Secure
Although only 4th on the list of most common claims, home security is an area where homeowners can influence the biggest savings on their insurance policies.
Insurers reward proactive measures taken to secure your home and this is reflected in both the price of contents and building insurance.
Of course, the added benefits are huge and protecting your home and family from risk of intrusion should also give you important peace of mind.
Fit Secure Locks
Whenever you shop around for your home insurance, you will know that providers will always ask what kinds of locks you have on your windows and doors.
By upgrading your locks, you can reduce your premiums; it’s that simple.
All windows should be fitted with key-operated locks and doors should be operated by a five-lever mortice deadlock (where appropriate). French windows, patio doors and similar should be fitted with a multi-point locking system.
All locks should have the BS 3621 Kitemark and be approved by the Association for British Insurers.
Fit a Security Alarm
There are several different types of security system that you can install in your home and each one offers varying levels of protection and deterrence. Of course, price is often the influencing factor around this kind of investment and it is important to note that although you should see a reduction in your home insurance premiums, this will not offset the cost of an alarm in the short term.
The decision to install a security alarm in your home should also be coupled with an appetite for protecting your home and family.
At the top level, you can opt for a monitored home security system which is linked to a 24/7 monitoring station that can raise an immediate alert to the emergency services. These kinds of systems offer the best chance at a lower home insurance premium but can be quite pricey as they not only include a capital investment sum but an ongoing charge for the monitoring support.
Standalone, or bells-only, systems offer some degree of early warning and can also be well-regarded by insurers.
Dummy-boxes may seem like a good, cheap alternative but will not win you any favours with the insurance companies nor, in all honesty, act as an effective deterrent to would-be burglars. According to Direct Line Insurance, fake alarm boxes are easy to spot.
Lastly, always check that the alarm system you are installing is approved by the Association for British Insurers.
Get a Safe
If you are a homeowner with a higher than average contents policy and have high-value items in your home such as collectibles, jewellery or even cash then a safe can be an excellent idea.
Most insurance companies will insist that any items over a certain value are detailed in your policy and may have separate insurance cover attached to them. By keeping these in a safe which is approved by the AIS (Association of UK Insurance Surveyors), you could find the cost to insurance these items are lowered.
Set Up a Neighbourhood Watch Scheme
Neighbourhood Watch (NHW) schemes are recognised by the Association of Chief Police Officers and British Insurers as providing an effective way to reduce crime.
Most insurers use your postcode as the primary way to build up a profile of your home and the area in which you live. By setting up a Neighbourhood Watch scheme, you could help reduce your own insurance costs as well as those in your local community. Not only that but NHW schemes are an extremely useful way to take a proactive approach to many issues faced by homeowners. From cold-calling and doorstep scams to dealing with anti-social behaviour, these groups can help bond local communities.
Limit the Time Your Home is Unoccupied
Leaving your home unoccupied can have a significant impact on the cost of your insurance,
Not only is an unoccupied home vulnerable to risk of intrusion but any accidental damage such as from burst pipes could potentially be more extensive.
Insulate Water Pipes
Insulating water pipes can help prevent damage from them being burst in freezing temperatures. This is the number one biggest reason for claims being made on a home insurance policy and the average cost of a claim of this type is around £25,000!
Whilst insulating those pipes will not actually reduce your premiums, it should help prevent you from having to make a claim in the first place. This will help protect that no-claims discount and avoid the hassle of potentially extensive renovation work. We know of a couple who suffered a burst pipe in their home whilst they were on holiday and the damage was so severe that it took over nine months before they could return to their home!
Fit Smoke Alarms
Fire may not be the most common type of home insurance claim but it can have devastating consequences to lives and property. According to recent data, fire in the home accounted for over 11,000 injuries last year, almost 500 of these were fatal.
Smoke alarms should be considered an essential and routine part of your home maintenance. Replace batteries regularly and ensure you perform routine tests at least once a month.
Home insurance premiums may not be greatly influenced by the presence of standard smoke alarms but some insurers do reward their customers for having monitored heat, smoke and carbon monoxide detection systems in place. Check with your insurer for details.
Fit Flood Defences
If your home is at risk of flooding, such as being situated beside a waterway, then you can help reduce the cost of your insurance by taking a proactive approach.
Flood defences are costly but can significantly help prevent or minimise the damaging impact that water damage can incur.
Call in the Arborist
Trees that are within 10m of your property can cause an increase in the cost of your home insurance for two main reasons.
Firstly, their root structure can cause damage through subsidence and upheaval and, secondly, they are a hazard for the property in the event of falling during storms.
Have those trees trimmed to prevent them from being a risk.
Telling Your Insurer
It is important that if you make any changes as recommended above which could affect the price of your home insurance premiums then tell your insurer!
Don’t leave this until your renewal as the changes could affect your monthly premium and should be noted in your incumbent provider’s systems.
Lastly, it is important that the information you provide to your insurers is accurate and that you only provide them with details of those measures you actually have in place. Misinforming your insurer about your security arrangements could result in your policy being invalidated in the event of a claim being made. In rare circumstances, this could even lead to prosecution and charges of fraud.
Always make sure that any upgrades you make to your locks, doors, windows and security are fully approved by the Association of British Insurers and carry that all important British Standard Kitemark.
Property Assistant and Home Advice
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To find out more about our bespoke property services, find out more about the local area and why we serve the community well, contact us today on 0118 912 2370.