Why does my home insurance price increase?
In a perfect world, we wouldn’t have to pay more than we need to for anything. Sadly though, we live in the real world (well, most of us do) and insurers aren’t just our saftey nets, they’re businesses too and they’ve got to make a profit. As with all business costs, some may get passed onto customers – such as for staff and facilities – if rent and wages increase then that need has to be met.
Add to this, insurance fraud which the ABI estimates costs the industry £1.32 billion in 2014. As a result, insurers spend at least £200 million every year identifying and investigating fraudsters. And it’s customers that share that burden with fraud costing us an additional £50 on every premium.
The government also increased Insurance Premium Tax from 6% to 9.5% in November 2015 which has had an impact on most policy types with some insurers passing the cost on to customers. The increase affects 20 million home insurance policies and adds an average of £10 to the cost of building and contents cover. As the tax is levied on car, pet and private healthcare insurance, some households will see the cost of their various insurance policies rise by almost £100** in total. Although you won’t have to pay anymore for your travel insurance (that’s already levied at 20%) and if you have your own rocket to the moon – then have no fear, spacecraft insurance hasn’t been affected either.