How you can cash in on falling home insurance prices

Home insurance premiums have tumbled to a four-year low, with some households now paying less than £100 a year for cover.


The average home insurance policy cost £115.82 in the winter of 2014/15, a fall of 22% compared with the average of £148.85 four years ago.

The study of more than 14 million home insurance quotes run on MoneySuperMarket from March 2010 to February 2015 also shows that premiums have dropped by 8% since last winter, when the average cost was £125.53.

Good news

The drop in premiums is good news for consumers – but only if they shop around at renewal.

That’s because insurers reserve their best prices to attract new customers, so if you stick with your existing insurer you are unlikely to feel the full benefit.

Kevin Pratt, insurance expert at MoneySuperMarket, says: “What worries me is that people who simply renew with the same firm each year won’t be taking full advantage of the fall in prices.

“It’s essential to make yourself a ‘new’ customer by shopping around each year before renewal.”
People in the Hereford HR postcode can expect the lowest overall premiums when they shop around for home insurance.

The average new premium in the area is £97.57 – the only region where the price comes in at below £100. The cost is £15.85 cheaper than last year, and 35% lower than four years ago.

The drop in premiums is good news for consumers – but only if they shop around at renewal...

Capital moves

Households in NW London postcodes are enjoying the biggest premiums falls at 18%, although the cost of home insurance in this part of the capital is still well above the national average.

The average premium in the London NW area is now £149.05, which is a £33 saving on last year, but still more than £30 above the UK average home insurance annual premium of £115.82.

Similarly, London W postcodes recorded a 14% year on year reduction in the price of home cover for new customers this winter, but average premiums are still almost £20 above average.

Rare increase

Homeowners in Northern Ireland live in the only postcode (BT) in the UK that has recorded a premium rise over the past year. Premiums for new customers in Northern Ireland are still cheaper than in many regions, but they rose 3% to £138.02 over the past year.

The figures over four years aren’t much better. The cost of cover for new customers has fallen by 3% over the past four years in Northern Ireland, some way behind the UK average decrease of 22%.  

Small decreases

Consumers in other areas are enjoying only small decreases year on year. For example, home insurance prices in Dorchester fell by less than 1%, compared to the national average of 8%. In St Albans and Watford, premiums for new customers dropped by about 2%, and by 3% in Glasgow.

Kevin Pratt says: “Whether the region you live has seen a price reduction or increase in home insurance premium prices there is still a need to shop around at renewal time to ensure you get the best policy for your home cover needs.”

Home insurance tips

Don’t automatically renew with your existing insurer. Always shop around for quotes so that you can compare prices.

-Make sure you’ve got enough cover. The sum assured is the maximum the policy will pay out in the event of a claim. If you have too much cover, you will be paying for insurance that you don’t need. If you don’t have enough, you could face an insurance shortfall if you make a claim.

-Check the single item limit. Most policies will pay out only up to a certain amount for a single, valuable item. Let’s say you have a computer that’s worth £2,000 but your policy’s single item limit is £1,000. If the computer is stolen, the insurer would only ever pay out £1,000. If you need cover for more expensive items, you’ll need to list them separately on your policy and tell your insurer.

-Make your home more secure by fitting burglar alarms and locks that are approved by your insurer. And make sure you use them, or you could invalidate your policy.

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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