Save money on your home insurance

June 2017 saw the introduction of a new standard rate of Insurance Premium Tax (IPT).

The new rate now stands at 12% of the premiums you pay for any type of general insurance, including your home insurance. When the tax was first introduced in 1994, the standard rate of this tax was set at just 2.5%, but it has increased steadily ever since. The 12% increase which came into effect on the 1st of June raised the level by two whole percentage points from the previous 10%

In a report dated the 1st of June, the BBC pointed out that a percentage tax such as this on the premiums paid means that the more your insurance cover costs, the greater the amount of tax you pay.

Higher rates of IPT are leading to two main trends therefore:

  • the cost of insurance generally is going to increase; and
  • the amount of tax paid increases in direct proportion to the cost of your premiums.

Home insurance

Despite these pressures, though, it is still possible to save money on your home insurance and, by reducing the cost of your premiums, pay less in IPT – whilst still obtaining the cover you need to protect your home and its contents:

Specialist brokers

  • when prices are rising, an experienced home insurance broker may help you find home insurance which offer good value for money, providing all the cover you need at a competitive rate;

Cover what you need

  • a broker may help you sort out the cover you need from additional elements that might be included in some home insurance packages;
  • by restricting cover to only those elements of cover which you actually need is likely to help save money on the cost of the premiums you pay;


  • one way of saving money is simply to buy less insurance cover by taking on more of the risks yourself;
  • the conventional way of doing that is to agree to a higher excess, since this is effectively an uninsured risk for which you do not have to pay, thus saving you money;


  • for many home owners, there may be a temptation to over-insure the building – to set a total building sum insured that is in excess of the likely reconstruction cost;
  • this means that you are paying for cover that you do not need and a more realistic estimate of reconstruction costs may result in your saving money on insurance premiums;
  • on the other hand, it is important to ensure that your contents are not underinsured – lest the settlement of any claim is insufficient to repair or replace damaged, lost or stolen contents;

Building and contents insurance

  • remember that the purchase of a combined building and contents insurance policy is generally cheaper than buying each one separately;

Pay annually

  • avoid the temptation to pay your premiums monthly – the vast majority of policies run for a full year, so paying in monthly instalments represents a form of credit, on which you pay interest;
  • save money on that interest, therefore, by paying for the full term of your insurance when you start and at each renewal notice.

Home insurance premiums across the board may be set to rise, but there are still steps you might take to reduce the cost.

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