Cheaper household insurance on offer

AFTER YEARS of steeply rising premiums, fierce competition is breaking out in household insurance, writes Vivien Goldsmith.

Direct Line, the telephone insurer owned by Royal Bank of Scotland, has increased the number of factors taken into account to assess premiums, such as the home-owner's age, and claims it can offer a cheaper deal on buildings and contents insurance for 90 per cent of households. The average saving, it claims, will be a third of current bills.

It is also keeping up its campaign against building societies that tie down borrowers to their own deals.

For a 35-year-old in a house in Barnet, north London, with rebuilding costs of pounds 82,000 and contents worth pounds 18,500, Direct Line would charge annual premiums of pounds 515 compared with pounds 703 from Sun Alliance, pounds 666 from Guardian Royal Exchange and pounds 658 from Norwich Union. Direct Line would charge pounds 589 including accidental damage cover compared with pounds 762 from Woolwich Building Society.

Royal Insurance is launching a new household contents insurance policy that takes into account the level of security and home-owner's age.