Home Insurance News

ABI increases flood insurance pressure

Wed, 8 Feb 2012 20:38:00 GMT

The Association of British Insurers says more than 200,000 homes could lose flood cover unless the government agrees a new deal with the industry.

Under an existing deal, which runs out in June 2013, insurers agree to offer cover to all homes built before 2009 except for those in areas of significant risk (defined as a greater than 1 in 75 chance of a flood each year). For homes in the "significant" risk category, insurers must always allow owners to renew an existing policy if there are plans to improve local flood defenses in the next five years. There aren't limits on the premiums insurers can charge in such areas.

The problem is that the insurers believe the deal is a good faith agreement in which they help out the public in return for the government continuing to fund flood defense work. They now argue that government cutbacks mean it isn't living up to the agreement.

Making what appears to be an appeal to individual MPs, the ABI has analysed the latest Environment Agency risk figures and highlighted 92 parliamentary constituencies in which more than a thousand homes are in the significant risk category and could thus struggle to

Flood insurance under scrutiny

Fri, 11 Nov 2011 15:26:00 GMT

An MP has called for a review of home insurance after finding some constituents in flood-risk areas had seen premiums rise five-fold.

Diana Johnson says some people are getting quotes of more than £1,000 a year, with excesses as high as £6,000. She questioned whether the market for insurance was working in all areas.

The complaint has reawakened the debate over the insurance industry and government's relationship. At the moment insurers have agreed to guarantee cover to areas with all but the highest level of flood risk, in return for the government continuing to improve flood defences.

However, government funding for that works looks set to fall by around 10 percent over the next four years as part of overall spending cuts. That's led to concern that the current agreement with insurers, due to expire in 2013, won't be renewed, with the insurance industry saying the government has reneged on its commitment.

In the meantime, there are allegations that some insurers are playing only by the letter rather than the spirit of the rules, with high excesses designed to deter insurance renewals from those at risk. One campaign group says it's heard of excesses being raised to as much as

Home insurance premiums reach record high

Fri, 21 Oct 2011 20:41:00 GMT

The AA has reported that premiums for both contents and buildings cover have risen, the latter to an all-time high.

The figures, which are based on a survey of multiple insurers, found the average buildings cover is now £152, a 14% rise across the past year. That's been blamed on an increase in claims caused by unusually high levels of severe weather such as storms and flash floods. The most common cause of a home insurance claim is now damage caused when water bursts out of frozen or otherwise damaged pipes.

Contents policies have risen by 2.2% to an average of £77.21. Getting contents and buildings cover still offers a discount, with the average cost £205.55, but that still represents an inflation-busting increase of 5.7%.

The same survey noted a £2 drop in the average comprehensive motor policy, though that appears to be a statistical blip: across the year, prices are up a whopping 16%. It appears that many insurers are making an overall profit on car insurance for the first time in a couple of years, so while prices will remain high, there may be room for

Precious valuables getting more valuable

Fri, 9 Sep 2011 18:52:00 GMT

Insurers have warned that rising precious metal prices mean home insurance policies may not fully cover valuable jewellery.

With gold and silver prices having rocketed, there are triple risks for policyholders. Firstly, there's been a major rise in the number of thefts involving jewellery: Churchill Home Insurance says it now features in a third of all claims. Secondly, the price increases mean around 40 percent of theft victims find they are underinsured, for example when jewellery pieces now exceed the single item payout limit on their policy.

Thirdly, and potentially most seriously, if policyholders provided a valuation at the time of taking out the policy, the insurers may only pay out to this value, even if the item's current (higher) value is within payout limits.

Insurers and jewellery professionals are now urging customers to get regular valuations of their items, arguing that the cost of doing so is worthwhile given the potential risks of making a claim while

Disasters have knock-on effect for policy costs

Fri, 13 May 2011 15:32:00 GMT

Lloyd's of London has warned that insurance premiums could rise as a result of global natural disasters.

The company provides underwriting to insurers, effectively offering them a measure of cover against paying out unexpectedly high amounts. While insurers build in an expectation of disasters when calculating premiums, the first few months of 2011 has seen far more major incidents than usually takes place in such a short spell, including flooding in Australia, earthquake in New Zealand, the tsunami in Japan and violent storms across the southern United States -- all developed economies where insurance is common place.

According to Lloyd's, a series of disasters on such a scale is bound to have knock-on effects even in comparatively peaceful countries such as the UK, simply because of how interconnected the insurance market is.

One financial expert told the Daily Mail he expected average household insurance would rise by 10% this year as a result. However, it's worth noting that shopping around can save almost 50% on average premiums, so it is possible to mitigate the

Insurers and government battle over flood cover

Fri, 7 Jan 2011 14:59:00 GMT

Insurers are continuing to warn that they might not be able to guarantee offering flood protection to some customers if government cutbacks affect the budget for flood defences.

At the moment, the Association of British Insurers has a deal with the government by which it promises to offer cover to all but those at the most at-risk homes, with the government committing to boosting defences. That deal runs out in 2013 and the ABI says that it can't be extended in its current form.

The two sides are also in dispute about whether the ABI has lived up to it's side of the deal. Critics say that those who suffer costs face hefty premium and excess rises, and there are questions about whether specific flood defence improvements have been reflected in lower premiums for affected householders.

In reply, the ABI argues that many people in flood-prone areas pay low premiums in comparison to their actual risk levels, and that most home insurers provide cover beyond what was promised in the agreement.

The Department for Environment, Food and Rural Affairs is continuing to consult on ways to tackle the flood insurance issue after

19 million households could be paying too much to protect their home and belongings

Thu, 6 Jan 2011 14:26:00 GMT

New research by the comparison site Gocompare.com has revealed that although 61 per cent of consumers are expecting 2011 to be a very difficult year financially, over 12 million** of them have never switched any of the 20 most common financial products including car insurance, home insurance, energy provider, credit card or mortgage lender.

13.8% of consumers have NEVER switched their home insurer. This is interestingly juxtaposed to the fact that 81 per cent of Brits are hoping to save money this year with 22 per cent citing bills and the rising cost of living as their biggest financial worry for 2011.

Other consumers are being proactive in trying to save cash by comparing the deals on their financial products, ditching uncompetitive providers and switching to companies offering better value for money. In fact, 26 per cent of consumers switched their home insurance provider in the last year which means up to 19 million* households could be paying too much to protect their home and belongings. In 2010 Gocompare home insurance customers saved, on average, over £238.22*** by switching their buildings and contents insurance after comparing policies from over 70 different insurers and brokers.

John Miles, business development director of Gocompare.com,

Home insurance policies most tempting for fraudsters

Fri, 31 Dec 2010 11:50:00 GMT

Home insurance has become the biggest problem area for fraudulent claims according to the Association of British Insurers.

Home claims now make up 170 of the 335 fraudulent insurance cases detected on an annual day. Motor insurance is responsible for "only" 108 bogus claims. However, such claims tend to be for much larger sums: fraudulent motor claims average £1.12 million a day (more than £10,000 per claim), almost half of the £2.3 million for the entire industry.

Those figures show why, despite home insurance scams apparently being more frequent, motor insurers continue to point to fraud as a reason for rising premiums.

Publicising the figures, the ABI also unveiled some of the more outlandish claims people have made in an attempt to defraud insurers. One policyholder claimed for DVDs he claimed to have bought in local shops, despite the fact the titles hadn't yet been released in the UK. Another crashed a car on a German racetrack (where he wasn't covered), but shipped the wreckage back to the UK and left it on a roadside before making a claim for a domestic road

Spending review may end widespread flood insurance

Fri, 8 Oct 2010 22:26:00 GMT

The Local Government Association has warned that homeowners' flood insurance could be compromised by government spending cuts.

At the moment, an agreement between the government and the Association of British Insurers means insurers must offer affordable flood insurance to all but the most at-risk properties. However, part of the agreement was that the government would continue to carry out "a long-term investment strategy, which will set out strategic flood prevention aims and assess future policy options and funding needs."

The LGA says there is a "real danger" that public spending cutbacks could mean not enough resources go into flood protection. That raises the possibility that insurers won't be as willing to extend the agreement when it comes up for renewal in three years.

The ABI has already raised that issue earlier this year. It's general insurance director Nick Starling said in July that "cutting back on investment in flood defences would be a false economy in these tough times." He warned that for insurers to continue offering cover "we need the Government to keep to its pledge, under our agreement, to deliver a long-term flood management strategy backed by the right level of investment.

Scammers pay price for insurance fraud

Thu, 19 Aug 2010 13:44:00 GMT

The Financial Services Authority has issued one of its biggest ever fines to the director of an insurance company that collected premiums but didn't put the policies in place.

The company, Jeffery Flanders (Consulting) Limited, had forged documentation to scam other insurance companies. The customers, many of whom were elderly or vulnerable, were left without adequate home and motor cover. Director Andre Jeffrey was hit with a £150,000 fine.

In a separate case four people have been banned from holding regulated finance positions, one of whom was fined £50,000, for their role in financial mismanagement at insurers Orion Direct Limited. Around £300,000 of the company's funds was used to set up a new insurance firm, Peppercom Plc.

This breached rules that say money taken in insurance premiums must be used primarily for providing cover. Although the policies appear to have remained valid, the misuse of funds increased the likelihood that the company would have been unable to make payouts.

The FSA's director of enforcement and financial crime, Margaret Cole, said "The FSA does not tolerate these types of failings. We will continue to take action against those who commit insurance fraud, as well as those who fail to take action to prevent

UK homeowners risking thousands with inadequate home insurance cover

Thu, 27 May 2010 17:50:00 GMT

As many as 1.5 million people could be without adequate home insurance according to a new survey.

A poll of 2,017 homeowners found 2% had contents insurance but no buildings cover, 3% had buildings insurance but no contents cover, and 1% had neither type of insurance.

The survey also found that the problems were more serious among young adults, with 12% of those aged 18-34 missing at least one of the two insurance types. London and the South East was the most underinsured area, with 11% of people across all age groups lacking one or both forms of cover.

Moneysupermarket.com, which commissioned the survey, warned that this was a substantial risk with burst pipes, subsidence and boiler breakdowns all posing potentially thousand of pounds in costs for those without buildings insurance. It noted that combined cover can cost as little as £169 for an average household and suggested those on tight budgets look for insurers who break down premiums into monthly payments without charging fees or

New figures show impact of location on home insurance premiums

Fri, 14 May 2010 17:43:00 GMT

Home insurance premiums can vary by almost three times depending on where you live according to new figures. The most expensive postcode, Stanmore in northwest London (HA7) has an average premium of £286.50, compared with just £103.98 in central Bournemouth.

The other most expensive areas were NW11 (Golders Green, £280.59), SE21 (Southwark, £279.07), NW7 (Mill Hill in northwest London, £270.76) and HA6 (Northwood in northwest London, £286.47). Five of the ten most expensive areas where in the Harrow postcode region.

Other areas among the cheapest were YO1 (York, £109.22), G5 (the Gorbals in Glasgow, £110.73), SP9 (Tidworth in Wiltshire, £110.79) and NG1 (Nottingham, £111.87).

The figures come from MoneySupermarket.com and represent the cheapest average quote for each postcode from the insurers it covers. The company noted that what makes an expensive or cheap area is a complicated process: areas at higher risk of burglary may also be areas where the value of homeowner belongings is lower. There's also an effect from the risk of subsidence or flooding in an

Rental rise highlights home insurance issues

Wed, 3 Mar 2010 19:11:00 GMT

A steep rise in renting rather than buying should serve as a reminder of the importance of getting the correct home insurance for all concerned, experts have warned.

The Residential Landlords Association says there are several reasons for the increase in the number of renters, including:

the difficulty of obtaining a mortgage as banks become choosier about new customers;
a rise in the deposit required on mortgaged properties, with a 20% downpayment now common;
more people struggling to save up to buy a home because of the effects of the economic downturn; and
a drop in the number of new houses being built meaning people who have to move home may struggle to find a suitable purchase to buy in the new location.

While there are some insurance benefits to renting rather than buying, such as avoiding the need to buy buildings insurance (this is usually the responsibility of the landlord), it's important to remember the landlord is not responsible for insuring a tenant's personal property.

If a problem with the house, such as a burst pipe, causes damage to belongings it's possible a tenant may be able to

Homes at risk from poor security and safety maintenance

Wed, 17 Dec 2008 11:08:23 GMT

A survey from Legal & General has revealed that many UK homes could be at risk due to poor maintenance of security and safety devices designed to protect us.

The annual 'Safe as Houses' report, showed that although we’re good at having home security features in place, we’re not good at checking that they're still working and could even be putting off repairs to broken or faulty home security equipment.

The survey asked people to provide details of the security and safety devices they have in their homes, and has shown an increase in the number of people with home security features fitted. Figures show that nearly 90% of us have a smoke alarm, 85% have window locks and 72% good quality door locks. However, of those that are putting off home maintenance, 37% one in five, 21% are delaying plans to repair broken or malfunctioning window and door locks and 11% are ignoring faulty alarm systems. For example, nearly 40% stated that they had a house alarm fitted, but 44% admitted that they had actually checked that it was in working order.

These are the top five safety and security features that people admitted they had never checked...

Fire extinguishers 69%
Intruder alarm 56%

Majority of home insurers still not offering a no-claims discount

Thu, 27 Nov 2008 14:37:23 GMT

New research released by Sainsbury’s Finance has revealed that UK home insurers continue to lag behind car insurers for rewarding customers with a no-claims discount.

The findings which were commissioned by Sainsburys Home Insurance, reveal that just one in four (26%) of home insurance policies offer a no-claims discount, preventing customers from benefiting from potentially huge savings. What's more, of those home insurers that do offer it, 8% penalise customers for making a claim by removing more than one year of no-claims discount, even if they have built up several years no-claims discounts.

Sainsbury’s Finance, whose home insurance offers up to 30% no-claims discount, believes that many insurers are treating their customers unfairly. Also, if homeowners do make a claim, their premiums may rise dramatically because they have not built up a no-claims discount.

Home Insurance Manager for Sainsbury’s, Neil Laird, said: "A no-claims discount can significantly reduce your premiums. For example, after five years of no claims, our customers could benefit from a discount of up to 30%. We don’t see any reason why insurers should offer no-claims discounts on their motor insurance policies but not on their home insurance, and it is alarming that so many providers are not being upfront and transparent about

Government Flooding Deal Ensures Insurance Availability

Sun, 20 Jul 2008 15:36:23 GMT

It's a year since unprecidented floods hit parts of Gloucestershire and the Midlands bringing devastation to thousands of homes.

In an effort to ensure continued availablity of flood insurance to homes in these and other areas, the Government and the ABI (Association of British Insurers) have reached an agreement on future flood prevention strategies.

Included in a package of measures the Government has commitment to deliver a long-term flooding strategy and stricter controls on new developments in and around flood risk areas. The new agreement comes as ABI research surveying the victims of last year's flood victims revealed:

80% believe the flood risk is getting worse.
75% think not enough is being done to tackle the flood risk.
90% say that new homes should not be built in flood risk areas unless there are adequate flood defences in place.

The ABI’s Director of General Insurance and Health, Nick Starling, commented:

"Last summer’s floods highlighted the urgent need for an overhaul in managing the flood risk. Insurers dealt with over 180,000 claims, and paid out £3 billion. The Government is now committed to a long-term flood strategy that will lead to a better understanding of the flood

Home Insurance Still Available for Flood Risk Areas

Thu, 10 Jul 2008 15:04:23 GMT

A year on from the devastating floods that hit many parts of the UK in 2007, research from Moneysupermarket.com has shown that it is still possible for homeowners in affected areas to secure home insurance cover despite being classed as a high risk.

Moneysupermarket analysed premiums for the twelve months to June 2008 for Tewkesbury which is now classified as a high risk flood area. From this two different stories emerge. The first shows that despite the increased risk for flooding in this area, homeowners who haven’t made a flood claim are still able to get competitive insurance from a wide range of insurers.

Unfortunately, it's not so easy if a flood claim has been made as only three insurers; Halifax, Birmingham Midshires and Sainsburys return any quotes. The good news is that these insurers still offer competitive premiums, with quotes on average only 5% more expensive than the previous year.

Head of insurance research at moneysupermarket.com, Peter Gerrard commented: "It's been a year since floods hit homes in Yorkshire, Gloucestershire and other parts of the UK. Those living in high risk areas can take some reassurance from our research. It is not all bad news, even if a claim has been made for flood damage, and although only a handful of insurers will provide a

Sainsburys Urges Homeowners to Review Garden Security

Wed, 18 Jun 2008 20:36:23 GMT

On the back of recent claims figures for garden thefts, Sainsburys Home Insurance is urging us to pay more attention to our garden security and to be on the look-out for green-fingered thieves this summer. The claims figures confirm an average garden theft home insurance for the year to January 2008 of just over £291.

Research from Sainsbury’s indicates that around 34% of items stolen are worth under £50, 23% are worth £50-£100, 26% are worth £101-£400 and 11% of valued at £401-£1,000. It's estimated that around 3% of stolen garden items are worth more than £1,000.

Commenting on the figures, Neil Laird, Manager of Sainsburys Home Insurance said: "Garden theft is on the increase and people need to take care to protect their homes. Homeowners need to review their garden security and ensure they have adequate insurance. Homes seen to have 'rich-pickings' that are left unsecured, may be targeted again so as well as tightening up security, it's worth picking a home insurance policy that allows you to benefit from and protect your no claims discount.".

Sainsburys is encouraging homeowners to fight back against garden thieves and take the following action:

Take photograph's of your valuable garden ornaments and mark property with your postcode
Start

Legal & General lauches interactive home contents calculator

Tue, 3 Jun 2008 20:09:23 GMT

Findings from a recent survey carried out by Legal and General home insurance confirmed that Brits are not very good at valuing the contents of their home.

The survey questioned over 4,000 people and revealed that 15% have no idea how much it would cost to replace the contents of their home. Although the average home contents value calculated by L&G is estimated to be over £40,000, the survey showed that 59% estimate that the cost of replacing their entire home contents would be less than £40,000. What's more, over a quarter, 27% valued their contents at less than £20,000, so potentially underinsuring their contents by 100%.

These figures suggest that UK residents could be seriously undervaluing their home contents and as a result under-estimating the level of insurance they really need.

So, in an attempt to help people more accurately value their house contents, Legal & General has developed a 3D online calculator designed as a virtual home which enables users to add up the value of their possessions, room by room. The simple to use room by room inventory format is designed to help ensure a more realistic total valued.

The calculator is available at www.legalandgeneral.com/contentscalculator.

Marketing Director for Legal & General general insurance, Garry Skelton, said... "Many of us seem to be seriously under-estimating the value of the contents of our

Home insurers tips to avoid identity fraud

Fri, 30 May 2008 16:04:23 GMT

Do you have a spare 400 hours and £8000? That’s the estimate from CIFAS and Which? for what it could cost you to clear up difficulties arising from identity fraud or theft.

Between January and September of 2007, there were 57,302 incidents of identity fraud reported to CIFAS, the UK's fraud prevention service. The Home Office estimates that identity fraud costs the UK economy about £1.7 billion a year.

Now, one of the UK’s leading insurers is doing something about it. Direct Line recently announced that it is providing free Identity Fraud Assistance for both new and existing customers who purchase home contents and buildings cover together.

Any Direct Line customer who has taken out a policy since 7th January 2008 is covered by the new service for free. If they are the victim of identity fraud, they can call the Identity Fraud Assistance Line and get a referral to the Victim of Fraud Team. The team will then help them through the necessary steps to resolve their case so they can get on with their lives.

Direct Line is working with Experian, one of the biggest credit reporting agencies, giving customers access to their credit reports so that they can spot any suspicious activities. Once they’ve reported suspicious activity, the Fraud team