What’s behind the increased costs of home insurance?
Most of the increase is due to the government raising Insurance Premium Tax from 10% to 12% in June 2017, which has added an average of £15 to the cost of combined buildings and contents cover.
However, other factors have an effect:
Insurance fraud cost the industry £1.3 billion in 2016, according to figures from the ABI, and insurance providers spend at least £200 million every year identifying fraud. Customers share the burden of that fraud and it adds £50 to the total cost of household insurance.
Insurance providers are businesses and have to make a profit. As with all businesses, some of their costs get passed on to customers.
According to a recent report from Consumer Intelligence, the weak pound (due to Brexit) is forcing up the cost of imported building materials and increasing the cost of repairs to houses. This, alongside the fact that homeowners are building more extensions and making more claims for leaky bathrooms, is also contributing to the increase in home insurance premiums.