Motor going up, but are home insurance rates coming down?
The bad news for consumers is that the cost of motor policies is increasing due to the large amount of road accidents involving young drivers. But there is some good news – home insurance is getting cheaper despite the widespread flooding in the UK last year.
As Simon Douglas, director of AA insurance, pointed out this week, young drivers make up an “increasing share” of the total number of people killed or seriously injured on Britain’s roads. It is estimated that only 17 per cent of UK drivers are aged under 25, but that age group accounts for almost a third (29.1 per cent) of casualties in road accidents. As a result, insurance premiums are going up for all drivers, but particularly for inexperienced motorists.
The AA’s newly published British Insurance Premium Index shows that drivers are, on average, forking out £39 more for their annual comprehensive cover than they were 12 months ago. Meanwhile, the average premium paid for Third Party, Fire and Theft cover now stands at £591 – this is £62 higher than the average paid a year ago. But young drivers are finding it more difficult to find insurers who will offer them TPFT cover – Allianz is the latest insurer to turn its back on this market.
However, while motor cover gets more expensive, there is some consolation in the fact that home insurance is getting cheaper. The average cost of contents and combined (contents and buildings) insurance fell during the last quarter. The price of contents cover dropped by £5, or 4.2 per cent, according to the AA’s index, while the cost of combined (contents and buildings) policies dropped by £6, or 1.9 per cent.
The fact that the price of home insurance has fallen comes as something of a surprise. It was widely predicted that the dramatic flooding of 2007 would result in an increase in the cost of cover. However, a highly competitive market has kept premiums in check. Douglas admitted that he had expected buildings and contents cover to “continue their upward trend”. He added: “I am a little surprised that the index is showing these falls – however, home insurance has become an extremely competitive market with some compelling offers over the past quarter and the quoted premiums reflect that.” Unfortunately for consumers, any savings they make on home insurance will have to be put aside to pay for their motor policies.
