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Home insurance premiums are going up

Alex Johnson

1893cbcedfa6978bed8a9ac78c0d42c68c54de84 300x225 Home insurance premiums are going upAccording to the new figures from AA Insurance, the cost of buildings cover rose 2.4% to £181 over the three months to the end of September (and 5.2% over 12 months), while contents cover rose 1% to £242 (7.2% over 12 months).

Simon Douglas, director of AA Insurance, said that the wet summer is a sharp reminder that the industry must be prepared for more of the same over coming years. Indeed, The Environment Agency and the Climate Vulnerability Monitor predict flooding will get considerably worse over the next decade, with the cost of flood damage in Britain likely to triple by 2030.

“I am very concerned that no agreement has yet been reached in finding an affordable option to the ‘statement of principles’ between the insurance industry and the Government, which ensures that families in flood-prone properties can continue to obtain flood cover,” said Douglas. “This expires in June next year and if no agreement is reached soon, could lead to the most vulnerable homes becoming uninsurable.

“To put this into context, insurers measure flood risk in terms of events likely to happen over a period of years. Even if a home is at risk of flooding once in a century, given that the average cost of repairing a flood-damaged property is £20,000 that is the equivalent of £200 per year, on top of the cost of covering other risks. It’s vital that the Government and local authorities make tackling the problem at source by investing in flood defences a priority.”

He added that £38 million was spent on flood defences in Carlisle following floods there in 2005 and that last month the new defences kept around 1,500 homes in the city dry.

In terms of buildings insurance, every region of the UK has seen premiums rise, according to the same report.  The most expensive region in which to insure a home is London and the South East, with the biggest regional premium increases in Yorkshire and East Anglia. Wales and the West Country continue to be the cheapest regions to insure a home. The highest premium for contents cover is in the Central and North West England.

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  • Richard Clarke

    Protecting vulnerable homes from flooding by managing rivers and building infrastructure is the role of central government (as it was under the temporary agreement the coalition inherited following the 2007 floods). Government collects the taxes and levies on pollution that are now being correlated with the increased risk of flooding. Spreading the extra insurance costs across the whole housing stock sends completely the wrong pricing and policy signals to the insurance market and let’s the government off the hook – to collect ‘carbon taxes’ which then get use for general expenditure (which ends up releasing yet more carbon dioxide!). The £20,000 example may be misleading. It implies that all homes will flood sometime over a century, whereas in fact only a small percentage will be affected. On the other hand, some homes may be repeatedly flooded. The insurance companies might, understandably, question the viability of insuring such properties. They will rationally “retreat” from it.

  • OldRedned

    ‘…..flooding will get considerably worse over the next decade, with the cost of flood damage in Britain likely to triple by 2030.’

    Does this mean the UK is going down the drain?

  • purpledragonalso

    Well I’d say its because this island is overcrowded and sinking!

  • Cydee

    Why are they still allowed to build on flood plains?


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