Price rises in home insurance are going “through the roof” as Insurance Premium Tax (IPT) increases and Brexit take their toll on the market, according to new analysis.
Home insurance premiums rose at more than double the rate of inflation in the year ending July, the fastest rate for three years, research from Consumer Intelligence – whose data is used by the Government’s Office for National Statistics to calculate official inflation statistics – has found.
Average premiums for the period rose 7% to £131, with prices for homeowners over the age of 50 even higher at 7.6%. Those with old homes are paying more too – premiums were found to be lower for newer properties built after 2000, compared to properties built earlier.
London had the highest average premiums at £159, which is 37% more expensive than the lowest average premium of £116 in the South West of England.
Most of the increase was driven by the June 01 rise in Insurance Premium Tax to 12% from 10%, which followed an earlier rise in October last year. But Brexit is having an impact too, as the weak pound drives up the cost of imported materials and increases the cost of repairs. Homeowners building more extensions is also a contributing factor, with more claims coming through for leaks from new bathrooms.
While insurance prices have been on the up, consumers are still paying less for their bills compared to February 2014, but Consumer Intelligence warned that the market is turning, with June and July this year seeing record premium increases.
“The home insurance market is very competitive so it is unlikely prices will rise as quickly as in the car insurance market unless bad weather claims increase,” John Blevins, Consumer Intelligence pricing expert, said. “But it is likely we will see a slow and steady rise in prices in line with inflation and the value of the pound.
“Several insurers are reporting a rise in claims for burst pipes which is not being attributed to one single factor. The boom in extensions and people attempting to fix their own plumbing problems are two of these factors.”
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