What influences the premium on my high value home insurance?

There are a number of answers to this question and George Osborne may not be the only culprit!

Insurance Premium Tax

Insurance premium tax has been historically low in the UK compared to many of it’s European counterparts. The tax was levied at 6% in 2011 having been set at 5% for many years. From November 2015 the Government increased the tax to 9.5% and has subsequently increased that to 10% from 1st October 2016.

 

Indexation

Most Insurers link the buildings and contents sums insured in line with indexation at a level of between 3%-5%. It is therefore likely that you will see small incremental increases in your premium every year. Of course, this is magnified when coupled with other increasing factors.

 

Claims

With a keenly rated High Net Worth market, Insurers are happy to provide discounts for clients who are claim free. The only problem with this is the possible premium increase the following a claim! Your Broker should be able to give you an idea of how a claim could affect your premium and manage your expectation accordingly. McLeod Insurance will always talk through the likely effect a claim will create.

 

New Insurers in the High Net Worth arena

The High Net Worth insurance market has become a competitive place over the last 10 years; many Insurance companies and Underwriting Agencies have entered this space over this period. Whilst this may of been good for the consumer, it can bring into question the long term sustainability of these premiums over the longer period. Many have had no option but to increase their rates as a result.

A good broker will have an idea of the model of these markets and, whilst we do not have a crystal ball, may well be able to advise if a move is of benefit long term. Like most businesses, Insurance Companies like to see some loyalty and you should be rewarded of that in the long term.

Whilst there is only a limited amount any Broker can do about the above, there are ways to manage premium. It may be that there are ways to ensure your premium is kept as low as possible, including:

 

• Taking an excess/deductible at a level you are comfortable with can have a dramatic effect on your premium.
• Ensuring you have a safe to keep unworn jewellery in can attract a lower rate. Many insurers will also give you the flexibility to swap items on a daily basis.
• If you are happy to remain with one insurer then ensuring your Broker is pro-actively looking at the rest of teh market to help negotiate your premium.
• Finding a level of security you are comfortable with should also discount your premium.
• Get a Broker who ask the right questions and listens! This will help a good Broker take to market and put your risk in the best possible light.

Remember, a good Broker works for you and not the Insurance Company!