Home premiums rising fast – research

Home insurance premiums are rising fast in response to soaring claims inflation and increasing fraud, according to research from Consumer Intelligence.

Average home insurance costs rose 8.5% to £131 in the year to October. That’s nearly three times the current rate of consumer price inflation.

Escape of water claims are rising as more homeowners install additional bathrooms or wetrooms. Rising gold and gem prices are also pushing up claims for jewellery.

Average premiums in London are the highest at £168, 41% more expensive than the £119 average premium in Southwest England.

Prices are rising fastest in Southeast England and in Wales where premiums are up to 10.6% higher than last year, while Scotland is seeing the lowest price rises at 5.6%.

Older homeowners (£127) now pay slightly less for their insurance than the under-50s (£133), with average premiums increasing 8.4% and 8.6% respectively, over the past year.

Though rising, home insurance premiums are still slightly lower than they were three years ago. Also, owners of properties built since 2000 pay average premiums of £114 because of tighter building regulations.

John Blevins, Consumer Intelligence pricing expert, said: “The home insurance market remains very competitive but customers can expect prices to continue to rise in line with inflation.

“Claims costs are increasing but there is no one major factor driving the market. Some trends are emerging, however, including escape of water claims and the cost of jewellery claims driven by price increases for gold and diamonds.

“Fraud also impacts home insurance claims in a similar fashion to motor – although claims tend to be smaller in severity, but greater in frequency.”