At the end of March 2014, the average premium for a buildings policy was £122.06, a fall of 0.7% over the quarter and down 6.5% over 12 months. For contents insurance the results were similar, with an average premium of £64.17, down 1.7% from £65.30 over the quarter and down 7.4% over 12 months.
For a combined buildings and contents policy the average premium was £170.59, down 2.2% in the last quarter and showing a fall of 8.4% over 12 months).
The premium average is based on a combination of the five cheapest quotes from both price comparison sites and from the direct and broker market. It uses a fixed group of customer representative of a broad spectrum of the UK home insurance market.
Downward trend may level off
Commenting on the findings, Simon Douglas, director of AA Insurance, said: "What is clear from these figures is that the flooding earlier this year - which was widely expected to affect home insurance premiums - has made no difference to the downward trend that has continued for two years.”
According to Douglas, the downward trend in home insurance premiums is likely level off, and we should not expect to see any significant increases within the foreseeable future. "The home insurance market is very competitive” he explained, “but its profitability is dependent on severe weather, floods, freezes and subsidence. Insurers don't change their home insurance rates as regularly or as frequently as they do for motor insurance, so premium movements tend to be more stable. It would take widespread severe weather damage to trigger a rapid change in rates across the market. I don't believe we'll see much pressure on premiums until and unless that happens."
However, Douglas also cautioned against choosing the cheapest home insurance deal, advising that “Low cost doesn’t necessarily equate to value for money.”
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