Join your Neighbourhood Watch, prune your trees & 10 other ways to beat rising house insurance prices
HOME insurance costs are rocketing.
This is due to soaring inflation, and the costs of repairs after a wave of storms last year.
Money rights expert Martyn James says: “Premiums have been rocketing and it’s important to have cover in place in case the worst happens, but with a few simple tricks you can lower the cost while still keeping your property and belongings protected.”
Laura Miller explains how savvy tricks can cut the cost of cover . . .
THE average home insurance quote rose by almost 28 per cent in the year to the end of July.
That is the shock revelation of the latest Consumer Intelligence Home Insurance Price Index.
Combined buildings-and-contents premiums paid by customers have climbed to on average £375 a year, and buildings-only cover to £298 while contents-only cover has stayed at £132, the Association of British Insurers (ABI) reports.
All regions have seen quotes soar, from a 34-per-cent jump in London to 22 per cent in the West Midlands, data analysts Consumer Intelligence say.
Inflation, and 2023 being the busiest year on record for weather-related home insurance claims, are to blame, says ABI.
Storms Babet, Ciaran and Debi in the final three months of last year caused £352million of damage to homes.
Homeowners now looking for buildings and contents insurance on a budget should shop around for the best deal.
But if you still feel priced out, these tips can help cut the cost . . .
DON’T OVERESTIMATE
THIS often happens with buildings insurance.
Many homeowners make the mistake of insuring their property for its market value, rather than the rebuild cost, and end up paying over the odds for their premium,” says Anna McEntee, insurance expert at Compare the Market.
The ABI rebuild calculator at abi.bcis.co.uk can help.
Equally, when you take out contents insurance, be as accurate as you can — if you overestimate, you’ll pay too much.
Aviva’s free home contents value calculator, at aviva.co.uk, can help you estimate the cover you’re likely to need, based on what you own.
GET A COMBINED POLICY
“IF you get a combined buildings- and-contents policy, the insurer might give you a discount,” says McEntee.
It’s worth doing research and getting quotes for both individual and combined policies to see how they compare.
DON’T DOUBLE UP ON COVER
MAYBE your bank account includes mobile phone cover? Perhaps you took out insurance on your tablet or laptop when you bought them, or have a gadget insurance policy?
If you find yourself with separate policies covering the same thing, you could save by cancelling the duplicate cover.
JOIN A NEIGHBOURHOOD WATCH SCHEME
SOME insurance providers offer discounts for members of these schemes.
“This is because you’re taking active steps to reduce the likelihood of needing to make an insurance claim,” says McEntee.
KEEP AN EYE ON TALL TREES
WHY on earth might this be? Because tall trees around your home increase the risk of its foundations becoming unstable or your roof getting damaged.
It’s a good idea to make sure trees are regularly pruned. You should expect to pay from £100 to £150 for pruning a small tree and something like £500 for a larger one, says trade website My Local Toolbox.
The average premium paid for a home insurance policy where a falling tree was listed as the only previous claim was £357, compared with £183 where there were no previous claims, says price comparison site Go Compare.
CHECK YOUR HOME’S FLOOD RISK
YOU can find this out from the Environment Agency.
Garin Cole, home product manager at Aviva, says: “If your home is at risk, ask your insurer if they are part of the Flood Re scheme, which was set up to help homeowners in high-risk areas to access flood insurance.”
BOOST YOUR HOME’S SECURITY
CONSIDER adding high-quality locks to your doors and windows and installing a burglar alarm.
McEntee advises: “If you have approved security and safety systems in place, your insurance provider might consider lowering your premium.”
Among 11 common home security brands reviewed by data analysis site CrimeRate in 2024, the price range runs from £120 for DIY bell-only home alarms up to £1,139 for fully equipped smart security systems with professional installation.
AVOID PAYING IN INSTALMENTS
PAYING your premium up front, in one go, usually cuts the cost of home insurance. If you opt to pay in monthly instalments, you might be charged interest on top.
INCREASE YOUR EXCESS
“IF you’re willing to raise the amount that you contribute towards a claim, the excess, you’ll usually pay a lower premium,” advises McEntee.
BUILD UP A NO-CLAIMS DISCOUNT
IF you don’t claim on your home insurance, you could be rewarded with a discount on your next premium. The longer you go without claiming, the more you can save.
McEntee advises: “You’re likely to be able to carry over the discount if you switch to another insurance provider, so make sure to include this when looking for a quote.”
CONSIDER A MULTI-YEAR FIXED DEAL
WHILE loyalty doesn’t always pay, and it helps to shop around for the best deals each year, if you prefer a bit of stability consider a multi-year fixed-rate deal, suggests Pete Mugleston, mortgage expert at Online Mortgage Advisor.
He says: “This can protect you from price hikes for the duration of your policy.”
DO A COMPARISON
FIFTY one per cent of customers could have achieved a saving of £225 on their buildings and contents insurance through Compare the Market, based on independent research by Consumer Intelligence during June 2024, so it is always well worth checking out what comparison sites offer.
TAXMAN CLOBBERS ELDERLY
TENS of thousands of OAPs are set to get tax demands this year for the first time since they retired.
A freedom of information request by LCP Partners revealed nearly 700,000 have been asked by HMRC to pay tax on their pensions. This was an increase of over 120,000 people compared with two years earlier.
One reason given for the rise is the year-on-year freeze in the value of tax-free personal allowance, coupled with a steady increase in the value of the state pension.
The personal allowance threshold, which is the salary point at which people start paying tax, has been frozen at £12,570 since April 2021.
Steve Webb, partner at pension consultants LCP and former Pensions Minster, told The Sun the “long-term freeze” of the personal allowance could be financially damaging for pensioners.
He said: “Although an average bill of £665 may not sound very large, it could be the equivalent of about three weeks’ pension, and a pensioner whose income is only just above the tax threshold may not have such a sum readily available”.
He predicts the number of retirees getting tax demands could rise further over the coming years due to the pensions triple lock – which means the payment rises every April by the highest out of inflation, the average UK wage increase or 2.5 per cent.
Markets still do not know what the pension rise will be but inflation figures released next week should give an indication.
- By Laura McGuire
MORTGAGE RATES ARE UP
BORROWERS could face a surge in mortgage costs as some lenders increase rates and withdraw their cheapest deals.
Coventry Building Society, Co-operative Bank, Molo, and LiveMore have all either raised rates or pulled their best fixed-rate offers from the market.
Prior to these latest changes, Coventry offered a 3.69 per cent five-year fixed-rate mortgage, one of the lowest rates on the market.
Interest rates on home loans had been on a downward trend with many homeowners and buyers expecting further reductions in the coming months.
However, David Hollingworth, Associate Director at L&C Mortgages, warns: “Fixed rate pricing depends on market expectations for interest rates, and current uncertainty over the forthcoming Budget, mixed messages from the Bank of England, and global unrest are pushing costs back up.”
Swap rates, which indicate market expectations for future interest rates, have been rising. These directly impact the cost of fixed-rate mortgages and lenders will look to increase their rates so that they don’t lose out.
The two-year swap rate was 4.06 per cent as of October 7, while the five-year swap rate was 3.81 per cent, according to Chatham Financial. In September, the respective rates were 3.91 per cent and 3.56 per cent.
Swap rates will remain uncertain until the BofE decides whether to cut interest rates from 5 per cent on November 7.
- By James Flanders