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Home insurance policies increasingly tailored to local risk

20/07/06

Homeowners will increasingly be unable to take out home insurance premiums which do not take into account the specific risks of their local area, according to an industry analyst.

The warning comes after the publication of the AA British Insurance Premium Index, which surveyed 35 home insurance providers in the UK and now claims the standard cost of both buildings and contents insurance is rising.

The average cost of home buildings insurance premiums has risen by 0.64 per cent to £208.111, while the cost of home contents insurance policies has increased by approximately one per cent to £1,512.83.

However, average premium figures may increasingly fail to represent the findings of individual homeowners, according to AA Insurance managing director Kevin Sinclair.

"These rises are within expectations - although I believe that the average figures mask wider extremes in the premiums homeowners pay.

"Insurers are taking an ever-more scientific approach to how they pitch premiums depending on risk, taking into account recent advances in flood-mapping and better understanding of subsidence-risk.

"For instance, two homes at opposite ends of a steeply sloping street will pay significantly different insurance premiums because the home at the bottom may be at greater risk of flooding."

This year, a Defaqto market report detailed the difference between the average level of home contents insurance premiums in the UK and the recommended amount of cover.

It was estimated approximately half of all residents in the UK may be underinsured for personal belongings inside the house.

To renew your home contents insurance policies go to Dial Direct