Rising Premium on Home and Contents InsuranceTue 24 January 2017 by Sherry
If you have had any kind of insurance for at least a couple of years, then you must have noticed that your premiums have jumped by more than fifty percent of what you originally started out with. The same is true for home owners insurance Virginia and contents insurance.
It seems strange though, doesn’t it? There are so many insurance companies in the UK today and they are all competing to get more customers. Economic rules state that when the market is saturated with a particular product or service, prices should drop. So why aren’t premiums dropping on house contents insurance when there are innumerable companies offering the same thing?
It’s not like many of us have a choice when it comes to taking home & contents insurance. Most people need a mortgage to buy a house. And the mortgage company requires you to have home insurance. So you have to get it even if you don’t want it. Yes, premiums are higher today than ever before. But perhaps by understanding why, you will know what steps to take to reduce your premiums.
The answer is simpler than you think and it has nothing to do with the incomprehensible laws of insurance. It’s actually quite straightforward. Let’s take a look at why home and contents insurance today has higher premiums than before.
Extreme weather conditions: Global warming has led to skewed weather all over the world. In the UK, it has led to extreme cold in the winter. This has led to over-worked radiators and pipes bursting because they get frozen. Following up on and dispensing those claims is difficult, time-consuming and costly, especially since it happens on a large scale at the same time of the year.
Cost of labour: You already know that everything costs more today including both raw materials and manpower. So when an insurance company is called in to cover a claim for simple home repairs, they find that they are shelling out much more than they did a few years ago. Skilled workers like plumbers and electricians are also hard to come by, and those that are available are rightly raising their prices. This is another valid reason for insurance companies to raise premiums on home contents insurance.
Incidence of natural disasters: Ok, so there have been no hurricanes or major earthquakes in the UK. But there have been floods. Floods destroy a house altogether. So it’s not just about a few major repairs here and there, it’s an overhaul. Flood damage can set an insurance company back by millions and millions of pounds. In fact, after the last major flooding, it was reported that insurance companies in the UK made payouts to the tune of over seven billion pounds.
The best thing you can do to get reasonable premiums is to get multiple contents insurance quotes and then do a comprehensive home contents insurance comparison either by yourself, if you know what you’re doing, or in consultation with an insurance agent.