Summary

Every year, Home & Contents insurance premiums go up. This article discusses why this happens and what you can do to offset the increase.

How to pay less on Home and Contents Insurance

Buildings Insurance went up again last year, costing homeowners another 1% a year, taking the average to just over £205 for a year's insurance. Contents insurance also went up, this time by 2% - now it costs the average homeowner £151 a year. However, some lenders are hiking prices even higher than that - Norwich Union for example, raised its prices by a whopping 6% last year.

The question is - why? There's so much competition out there, you'd expect prices to be falling, ( motor insurance ) not increasing - but there are other forces at work, as we go on to discuss.

No 1 - the cost of having a house repaired or rebuilt

Labour and building materials are getting more costly, so when

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the insurance company calculates how much it would cost to rebuild your house, prices are higher. This is due to inflation, and the same thing affects the insurance company and its own operating costs. Wages, bills, office rental - all these costs are increasing year on year - so of course insurers have to factor these in.

No 2 - the weather

The British weather is getting more and more tempestuous, whether it's due to global { motor insurance quotes } warming we are not qualified to say, but it's a fact that we have been experiencing a lot of extreme weather in the past few years. The 1987 hurricane was a freak occurrence, but flash floods such as the incident in Boscastle, Cornwall, Helmsley in North Yorkshire, and Carlisle are making { life insurance } the headlines on a regular basis. The Association of British Insurers has stated that the average insurance claim due to flood damage could be anything from £15,000 to £30,000, making huge dents into the insurance industry's profits. In fact, floods cost insurance companies millions every year.

No 3 - Burglary

Claims due to burglary have been going up, now average at around £1,400. The 2 main causes are:

• From digital cameras to laptops, game consoles to ipods - our houses are full ( car insurance quotes ) of electronic gadgets with a high value bought new, and a high value resold. Burglars are after these items and it's hitting the insurance industry where it hurts - their pocket.

• Burglars pick posh neighbourhoods to ensure they get { life assurance } away with the best items - with expensive items like jewellery for the taking, the value of these kind of claims is increasing.

Click here for part 2