Cost of home cover hiked 20% in past two years
The cost of home insurance has jumped by 21% over the past two years, according to research by Compare the Market, following hikes to insurance premium tax and the introduction of Flood Re.
It found that the average cost for buildings and contents insurance now stands at £161 per year, rising from £133 in April 2016.
The cheapest premiums available to households have also risen significantly over the past two years, increasing to £141 on average from £118 in April 2016.
Premiums have been steadily increasing over the past two years, as insurance premium tax (‘IPT’) has been steadily hiked by the Government from 6% to 12% over the past three years.
The impact of Flood Re, the government-backed reinsurance scheme designed to help provide affordable cover to homes in areas with a high risk of flooding, has also driven up premiums. While the system provides much needed home insurance cover to many, it effectively spreads the cost of insuring these houses which means that insurers need to increase premiums across the country to subsidise the at-risk homes.
Further to rise
Compare the Market said the trend in rising premiums is set to continue and a rise in property claims from the ‘Beast from the East’ storm earlier this year is partly to blame.
Chris King, head of home insurance at Compare the Market, said: “With recent research finding that over five million UK households do not have home insurance, the continued rise in the cost of home cover will be a blow to the millions that can’t afford it.
“Home insurance should be considered essential to every household – but if premiums keep rising, more and more people will be priced out of the market.”