Revealed! Insurance premiums are on the rise. Are you affected?

Consumer Intelligence carried out a study that reveals insurance premiums are on the rise. Are you affected? How can you reduce your insurance costs?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

According to the ONS, the Consumer Prices Index (CPI) rose by 5.5% in the 12 months to January 2022, up from 5.4% in December 2021. Families are already struggling with food price increases and rising energy bills, and experts predict a further rise in the coming months, meaning more financial pressure on families. Households need to act now to remain financially resilient.

Consumer Intelligence carried out a study revealing that insurance premiums have also been on the rise. Are you affected? How can you reduce costs? Let’s find out.

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What are the average premiums for home and car insurance?

The average home insurance premium (combined buildings and contents) is currently £154, a 2.9% increase in the 12 months to January 2022. However, older people, especially those over 50, are presently paying £161 on average, a 5.8% increase in the 12 months to January 2022.

The average car insurance premium stands at £705, a 2.8% decrease in the 12 months to January 2022. This might be because of the shift in driving habits due to the Covid-19 pandemic. It could be argued that there might be fewer accidents with more people working from home. However, age does impact the premium you pay. Younger people (aged20-35) and older people (above 75) pay more than those aged 45 to 65 since they’re considered higher risks.

Basically, younger people are considered to be the most reckless drivers, while older people are deemed to have poorer vision and hearing, slower reaction times and an increased tendency for confusion. These characteristics mean they are more likely to get into an accident than other age groups.

Consumer Intelligence did, however, discover that over 50s saw a 2.7% increase in car insurance premium in the 12 months to January 2022, setting the average price at £360.

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Why do older people pay higher home insurance premiums?

Older people tend to live in larger and older homes. It goes without saying that a larger home will attract a higher insurance premium. If the home is old, the chances are higher that it might be at risk of structural damage if not properly maintained.

Additionally, older people usually have more valuable items, meaning they require a higher level of contents cover.

What can you do to save money on insurance amid inflation?

As inflation continues to soar in the coming months, we can expect an increase in the cost of motor repairs, car parts, building materials and labour. This will, of course, push car and home insurance prices up further.

The FCA price walking remedy that came into effect on 1 January 2022 protects you from higher renewal prices. However, the secret to saving money on insurance is to always shop around for the best deals, even if you think your existing deal is already good.

The Motley Fool has made work easier for you by sharing a list of top-rated websites that you can use to compare home insurance and car insurance. However, once you find a cheaper deal, ring your existing insurance provider and ask if they can match the better deal before you switch providers. If they can’t, you can think about shifting, but be sure to read and understand the terms of the new policy first.

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