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How Inflation is Inflating Your Building Insurance Bills

Personal_Finance / Insurance May 31, 2022 - 01:46 PM GMT

By: Boris_Dzhingarov


As expert and experienced insurer Deacon Insurance admits, flat insurance policies can be quite complicated and it’s a greatly different situation to that involved in insuring the average, standard property. The numerous issues around it, and many factors influencing it, are wide and varied, while the cost of it is increasing all the time. This might be old news to you, but it’s worth looking into to see if you can save yourself some pennies.

So, why the sudden increase in insurance premiums, especially for those who own the lease for a block of flats?

If you haven’t heard people talking about “the cost of living” over recent months, you must have been living under a rock. Why? Because everyone is talking about it. The cost of living has been going up all over the UK since early 2021 and recently, in April 2022, inflation reached the highest level ever recorded. According to the ONS, the Office for National Statistics, it is estimated that inflation is now higher than since the years around 1982 and it is having a profound impact on the costs of goods and services for households and businesses alike. From April 2021 to April 2022, consumer prices were shockingly 9.0 percent higher. This is due to several factors, from booming demands to bottlenecks in the supply chain. Additionally, after the pandemic, the global demand for gas returned as to usual as restrictions were lifted. This in turn caused a significant increase in the price of domestic gas and electricity. Russia’s recent invasion of Ukraine has also played a large role in UK inflation, which was initially forecast to peak at 7.25% in April 2022. However, after the unrest in Eastern Ukraine, economic forecasters have worryingly raised their expectations for inflation. Not only are prices due to increase more sharply in the long term, but they are also expected to be higher for a longer period of time. This inflation is here to stay, and is only going to cause more and more damage as it continues to expand.

So, what has this got to do with insurance premiums?

Remember this very important point: inflation will affect every industry, and it is doing so already now. As repair materials astronomically go up in price, so will the insurance needed to cover it, in proportion to the materials expense. Logically, the more expensive your building is to repair, the more money you will have to pay for your insurance.

When it comes to the realms of insurance, you often hear the term “hike” over “rises” in reference to way the costs go up – they jump up significantly. As a leaseholder, paying your share of the building’s insurance premium for your block of flats is most often a mandatory requirement as stipulated by the terms of the lease. As you well know, it’s usually the biggest number on your service charge bill and you might feel helpless over any say in the matter.

There are things you can do to help yourself and your pocket! Firstly, don’t be gullible and go for the first offer you see or agree to the first increase that comes your way. It’s worth your money if you can do a little shopping around and be your own advocate; challenge price hikes or get the help of an insurance broker to fight your case and do the hunting for advantageous deals. Secondly, do your best to promote preventative measures over curing of problems. Help occupants to spot issues before they escalate and you’ll not only preserve your no claims bonus, but you’ll also save yourself a lot of time and stress.

By Boris Dzhingarov

© 2022 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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