Households are being hit with substantial home insurance premium increases following recent government tax hikes, with prices for the over-50s rising fastest.
Analysis from insurance market research expert, Consumer Intelligence, reveals that home insurance premiums are rising at the fastest rate for three years. The average premium rose by 7% in the year to July, taking annual prices to £131.
But households over the age of 50 are worst affected with premiums rising on average by 7.6% compared to a 6.7% increase for the under 50s.
This follows news Moneywise reported in July, that motorists in their 50s have been hardest hit by car insurance premium increases.
The significant rises have been largely attributed to the government’s decision to hike Insurance Premium Tax (IPT) from 10% to 12% from 1 June. Recent increases in inflation have compounded this, along with the devaluing of the pound, which has made household repair materials more expensive.
Insurers reporting a rise in claims
John Blevins, Consumer Intelligence pricing expert, says: “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.
“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.”
On a regional basis, Londoners experienced the biggest home insurance price hikes – with policies rising by around 9.2%. The East of England and East Midlands saw the slowest increase of 6.2%.
See the table below for the full regional variation in average premium costs.
Change in year to July 2017
Average premium (based on five cheapest premiums)
Yorkshire & Humber
Source: Consumer Intelligence, August 2017.
We have had several queries as to why the over 50s are hardest hit so asked Consumer Intelligence why.
Their response was that on average the over 50s age group:
• proportionally more homeowners than under 50s
• tend to own higher value properties that have benefited from higher house price inflation
• tend to own more high value items inside their homes
These factors have led to higher increases in premiums than for those under the age of 50.
The Moneywise Team