Feature Article: (Published November 2011)

Jersey Hits Jackpot in Home Insurance Postcode Lottery

By Moneysupermarket.com

You might not realise it but the area that you live in can have a big effect on the cost of your Home Insurance premiums, the UK as a whole may have experienced an average decrease in costs of 0.4% but this figure includes some areas enjoying large decreases and others suffering similarly large increases.

MoneySupermarket.com has undertaken research into 2,957,505 home insurance quotes from June 2010 to May 2011 and compiled the data in their home insurance monitor, the data shows which areas were the biggest winners and which areas the biggest losers of the UK postcode lottery for home insurance.

Jersey were the biggest winners, hitting the jackpot of a decrease of 13% to the cost of their home insurance premiums, followed by homeowners in south and east London who both enjoyed a 7% decrease and Norwich who enjoyed a 6% decrease.

The top ten winners of the home insurance lottery:

What are the reasons behind these areas enjoying these decreases?  Julie Fisher, head of home insurance at MoneySupermarket commented: “Our research shows some areas have seen more of a decrease in the cost of their premiums than others. Unfortunately, postcodes can dramatically affect how much people pay for their home insurance premium. For example in Jersey, one fifth of the population is retired, and low crime rates coupled with mild weather conditions means that the cost and frequency of claims are likely to be lower than other areas of the country. East London is undergoing significant regeneration and infrastructure improvements and insurers may be adjusting premiums as a result.”

While these areas will be jumping for joy at the decrease in their home insurance costs, other areas are suffering from substantial increases. Interestingly follow Channel Island Guernsey experienced the biggest rise in premiums with a 32% increase, followed by Orkney and the Shetland Islands at 21% and 20% respectively and Llandrindod Wells in Wales with 12%.
The top ten losers of the home insurance lottery:

These are quite significant price increases; Julie Fisher explains why these may have happened “In the case of Guernsey, Orkney and The Shetland Islands, home insurance cover in Summer 2010 was lower than the national average premium price. It is likely that insurers have brought these prices in line with the rest of the country, rather than responding to any specific ‘occurrences’ on these islands, although climate may play a part. 

In terms of the other areas that experienced an increase this could be due to several reasons: “If your property is classified as being in a ‘high-risk’ area – whether for crime, flooding or even fraudulent claims – it will be reflected in your insurance premiums. Living in a more affluent area will also increase premiums as property and contents values will generally be higher. Insurers use postcodes as a part of the overall risk factors when calculating premiums. Although there is very little you can do about the postcode in which you live, except move house, there are steps you can take to reduce your premiums, such as, installing a good home security system and security lighting.”

Whilst there is little you can do to change your postcode (except move areas of course!) there are some things you can do to reduce your home insurance premiums:

Understand your cover – It may seem an obvious one but reading the small print on your home insurance policy can save you a lot of money. Make sure the policy you have is the right one for you, costly add-ons can increase premiums by up to 25%!

Protect your home – Installing a home security system can reduce premiums by 7.5% whilst joining your local neighbourhood watch can reduce home insurance premiums by up to 5%. Using time switch lights whilst you are away from the property and installing security lighting will also help to discourage any would be thieves.

Maintain your home – Look out for frozen or burst pipes, if you think your pipes could be frozen, turn the water off at the valve and header tank to cut down on the amount of water that might escape, keep an idea on subsidence, this is one of the most common problems to effect the home and although usually covered in building insurance policy check the excess level and if your garden walls are covered.

Fire Safety – Fitting smoke alarms and being vigilant with fire safety is important. If you are a smoker you will be asked this when taking out your insurance policy.

 

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