Home contents insurance due for a shake-up: Vivien Goldsmith explains why one area faces a premium increase of 150 per cent

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HOUSEHOLDERS looking for contents insurance will have to give more and more information about themselves and their home as insurers move towards individual rating.

Direct Line, the telephone-based insurance company, is planning to revamp its contents insurance policies in an attempt to give a more accurate risk profile of every applicant. 'Each premium will be unique,' said a Direct Line spokeswoman.

Motorists are used to having a welter of details considered for motoring insurance such as whether they have a garage or the car has been modified, their age, claims history and whether the car is used for work as well as the obvious questions about the age and make of the vehicle.

Under the Direct Line revamped insurance due to be launched at the end of the summer, householders are similarly expected to give more details for their rating rather than a simple postcode and number of bedrooms or the amount of cover needed.

Royal Insurance has already started moving in this direction. For instance, it imposes a 25 per cent loading if the property is regularly left unoccupied between 5am and 5pm. 'Our data base is getting better all the time,' said a Royal spokesman.

It has already noted that older homeowners make fewer claims, presumably because they spend more time at home which deters burglars, and larger houses have disproportionately more expensive contents. 'Eventually we will move towards a monthly adjustment of rates,' said the spokesman.

The Prudential, Britain's largest home insurer covering two million households, has only recently started refining the area ratings down to individual postcodes. While there has been an average increase in premiums for Pru customers of 12 per cent, some customers in rural areas have actually had premiums reduced.

There is also a 20 per cent discount for the over-fifties, 5 to 10 per cent discount for good locks and a possible further 15 per cent discount for taking out buildings insurance as well, making a possible maximum discount of 45 per cent.

At Endsleigh Insurance, low-risk properties in rural areas and high-risk properties in the inner cities have had premium increases of 9 per cent, while those in the middle have suffered increases mostly between 80 to 100 per cent.

The highest rise was in Didsbury, a suburb of Manchester where rates have shot up by 150 per cent. Neville Statham, property underwriting manager with Endsleigh, said: ' Didsbury is on the main road from Moss Side. It is typically large Victorian houses converted into flats where young professionals live with plenty of porches and trees.'

Rates in central Leicester have doubled. Large towns and cities that were low-risk are now developing inner city characteristics. Plymouth, Cheltenham, Bristol, Slough, Reading, Milton Keynes, Guildford, Sheffield, Bolton, Blackburn and Newport, Gwent, all now have serious local problems, says Mr Statham.

'With motorways linking areas in a very short time, no one is safe anymore,' he declares.

With Endsleigh Insurance, Gloucester (see table) has had rates raised by 9 per cent, London N1 by 20 per cent and Glasgow by 31 per cent over the past year.

But Bradford rates have gone up by 84 per cent because it has been rerated. It has also been rerated by the Pru, which has increased premiums by 34.5 per cent.

Woolwich Building Society, which has a panel of insurers led by Legal & General, raised premiums by an average of 50 per cent last month, 10 months after the last rise. It has 10 rating bands. But it will no longer quote for Bradford because the claims experience has been so bad.

Each application is individually examined and judged. Direct Line has marked Bradford down for an increase of just 8.5 per cent, and charges less than half the rate quoted by the Pru.

Eagle Star has jacked up premiums by an average of 21 per cent in the past year, but in Bradford the rates have been raised by 47 per cent after the BD5 postal area was moved up two rate bands. Eagle Star has a no-claims discount which gives a 5 per cent reduction after three claim-free years. The discount increases by 5 per cent a year up to the maximum discount of 20 per cent. There are also security discounts.

An Eagle Star spokesman said bedroom-rated policies were now more expensive than those buying a set level of cover. 'Insurance companies have had bad experience with these policies,' he continued. 'Maybe they underpriced them. They are giving rather a lot of cover, so the premiums are high and perhaps people want something back for it.'

At Legal and General premiums on bedroom-rated policies have been increased by 40 per cent. 'They were underpriced,' said a spokesman.

Norwich Union is introducing a no-claims discount and loyalty bonuses this year.

The AA claims to have been the first to offer no-claims discounts. It now also offers discounts for being a member of Neighbourhood Watch, the over-fifties, security devices, first-time buyers and for taking a voluntary excess.

----------------------------------------------------------------- Table: Contents Insurance: Annual Cost for a Three-bed Terraced House ----------------------------------------------------------------- Cover London Glasgow Gloucester Bradford N1 G12 GL6 BD5 pounds pounds pounds pounds Abbey National Bedroom-rated 270.00 219.00 70.00 126.00 Leeds pounds 14,000 234.00 124.80 60.84 124.80 Woolwich Bedroom-rated 588.00 483.00 190.92 Refer Direct Line pounds 15,000 228.00 114.00 43.00 114.00 Eagle Star Direct pounds 20,000 370.00 220.00 88.00 220.00 Prudential pounds 30,000 511.00 409.00 90.00 264.00 Endsleigh pounds 25,000* 299.00 169.00 59.00 219.00 Royal Silver Cover 314.16 165.75 95.16 216.85 Legal & General pounds 20,000 360.00 280.00 75.00 160.00 ----------------------------------------------------------------- *Charge for paying monthly. **Householder 50 years old, pounds 100 excess. -----------------------------------------------------------------

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