Lowering Home Insurance Expenses: A Guide
Nailing down the perfect home insurance is a must, as it's likely one of your most valuable assets we're talking about here.
Shopping around is your secret weapon in finding budget-friendly coverage that gives you the most bang for your buck.
Let's take a look at a snapshot of the current market, according to the Association of British Insurers (ABI). The average price of a household combined buildings and contents policy in the third quarter of 2024 rose 3% compared to the previous quarter, reaching £407, and that's a 16% increase compared to the same period last year.
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Why so high? The ABI points the finger at adverse weather events, which are becoming more frequent and lead to higher claims for insurers. In the last quarter of 2024, insurers paid out a whopping £1.6 billion in claims, bringing the total cost for the year up to a record-breaking £5.7 billion.
Combined home insurance
Independent research from Go.Compare Home Insurance posits that the cost of a combined home insurance policy has increased 8.5% in the last year. The average policy costs £231 between October and December 2024, up from £213 in the same period the previous year.
£285
But don't fret! There are ways to cut your premiums without sacrificing coverage. Let's dive in:
£231
Trimming Your Home Insurance Costs
19%
1. Combine Policies
Rather than buying separate buildings and contents cover, combine your policies for some serious savings! Insurers often offer a discount when you buy two policies from them.
Buildings insurance
Contents insurance protects your home possessions from loss, theft, damage, or destruction, and usually includes items like furniture, appliances, clothing, electronics, and personal items. The cost varies depending on the level of coverage selected.
£242
On the other hand, building insurance covers the cost of repairing damage to your home, such as fires, floods, storms, or vandalism. It generally covers the cost of repair to walls, roofs, floors, and property fixtures.
£208
2. Pay Annually
14%
Instead of monthly installments, consider paying for your insurance annually. While monthly payments may seem more manageable, insurers charge more if you choose this option due to the additional administrative expenses involved. The average home insurance policy costs 19% more when paid monthly, according to Go.Compare. A smarter, more cost-effective way to pay if you don't want to pay all at once? Put it on an interest-free credit card and spread the payments out.
| Header Cell - Column 0 | Average monthly premium | Annual premium | Savings with an annual payment || --- | --- | --- | --- || Combined home insurance | £285 | £231 | 19% || Buildings insurance | £242 | £208 | 14% || Contents insurance | £89 | £66 | 26% |
Contents insurance
Based on median premiums of home insurance sales made through Go.Compare between October, 2024 and December, 2024.
£89
3. Improve Home Security
£66
Step up your home security to score huge savings in the long run. Upgrading your home security measures, like installing thief-resistant locks, alarms, CCTV, and security lighting, not only gives you peace of mind but also grabs the attention of insurers. These measures can help reduce your premium by as much as 10%.
26%
4. Join a Local Neighborhood Watch
By joining or setting up a local Neighborhood Watch, you can potentially reduce your premiums by 5%. Such schemes help decrease crime rates in your neighborhood, increasing the chances that you won't need to make an insurance claim.
5. Dial Back the Extras
Examine what you're paying for and consider simplifying your policy by skipping add-ons like emergency home protection and accidental damage coverage. These extras often increase your premium but may not be necessary for your unique needs.
6. Use Your No-Claims Bonus
Don't forget about your no-claims bonus—insurers love customers who keep their claims to a minimum and will reward you accordingly. Even a single-year no-claims bonus could save you 10%, while five years' worth of no claims might shave up to 50% off your premium.
7. Increase Your Excess
If you're willing to shell out more out-of-pocket in the event of a claim, increasing your excess can help lower your premiums substantially. A higher excess could reduce your premiums by approximately 25%.
8. Watch Out for Admin Charges
Don't forget to check for hidden administrative fees that could pop up when cancelling your policy, making changes to personal details, or missing payments. Understanding what you might be charged for can help you avoid unnecessary expenses.
To reduce premiums in the realm of personal-finance and home-and-garden, one can consider combining buildings and contents insurance policies as insurers often offer discounts for holding multiple policies (a strategy known as combining policies). Another effective method is to pay annually instead of monthly, as annual payments can save up to 19% compared to monthly installments (savings with an annual premium). Improving home security, such as installing alarms, CCTV, and thief-resistant locks, can potentially result in a 10% reduction in premiums (improve home security). Joining or setting up a local Neighborhood Watch might also contribute to a 5% reduction in insurance premiums (join a local Neighborhood Watch).
