The Index shows that just £2 has been added to the average Shoparound quote for a typical combined buildings and contents policy, an increase of 1.4% to £158.48.
Standalone policies have also risen: for Buildings, by 1.5% to £113.46 and Contents, 3.0% to £60.41.
Michael Lloyd, director of insurance at the AA says that although premiums have risen, they remain significantly lower than the same quarter in 2010 when a typical quoted premium for a combined policy cost nearly £30 more than it does today.
“We have enjoyed a long run of generally benign weather – and while there have been some costly floods and damaging storms, they have been fewer and less costly than insurance companies expected. As a result, premiums have been falling for some time but are now bouncing back from a historic low. Rising premiums I believe, reflect growing nervousness about potential severe weather claims which many climate experts predict.
At the same time, the launch of Flood Re brings the very welcome availability of affordable home insurance to those in areas most prone to flooding, and is backed by the insurance industry. It uses the principle of sharing risk across the industry for the benefit of those most likely to be affected. And with a growing risk of future flooding in many parts of Britain this is an important step forward for home owners.
Inevitably, this contributes to insurance company costs which in turn is reflected in the relatively modest premium increases we have seen.”
Meanwhile, contents insurance has risen faster than buildings and Lloyd believes that this is because of a combination of increasing home contents values as well as rising fraud, such as exaggerated and false claims.
He points out that over time, many families may also find that their contents are under-insured and urges families to check the value of their contents from time to time to make sure they avoid the risk of under-insurance which, in the event of a large loss could lead to only a proportion of a claim being met.
“Talking to your insurer or broker about increasing the value of your contents makes good sense,” Lloyd adds.
