New figures released by the AA show that the cost of home insurance cover in the UK continued to rise in 2011. The recent cold winters have caused a spate of weather related damage while the austere economic climate has fed into a rise in certain types of crime.
Premium rises above inflation
In its latest edition of the British Insurance Premium Index, AA shows these rises in premiums in grisly detail. Buildings insurance premiums rose by 3.1% in the last three months of the year and ended the year 9.5% higher than the previous 12 months. This is not only well above the official inflation rate of 5%, but means that the average cost of insuring a building grew from £143.36 to £156.95.
Dramatic increase in contents insurance premiums
There has been an even more dramatic increase in contents insurance cover premiums over the course of 2011. The cost of contents insurance rose by 4.4% in the last 3 months of the year to finish the year on a double digit rise of 11.2%. The AA thinks that homeowners are now paying an average premium price of £80.58 to protect the possessions in their homes.
The director of AA Home Insurance, Simon Douglas, outlined a number of factors which he thought had contributed to this trend of rising home insurance premiums. The rise in building insurance was likely to be the result of two harsh winters, which had lead to a rise in claims for burst pipes, flood and storm damage. It remains to be seen what effect the relatively warm winter at the end of 2011 will have on buildings insurance premiums.
Increase in domestic burglaries
The reasons for the concurrent rise on contents insurance has been partly explained by reference to the rise in certain types of crime that bear relation to the current economic climate. Figures from the latest annual British Crime Survey show a 10% increase in the numbers of reported domestic burglaries in the 12 months prior to June 2011.
This is not, however, a nationwide occurrence. This rise in domestic burglary is a regional phenomenon; some areas, such as South Yorkshire, have seen crime fall to its lowest level in 20 years.
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