How home insurance premiums can give insight when buying a house

Home insurance premiums can give you a good insight into an area before you start looking for houses.

Since these prices take into account the risk of events like burglary and flooding, it stands to reason that areas with a higher insurance premium would be a riskier place to live.

Here are the postcode areas in Great Britain that had the highest (and the lowest) home insurance premiums in 2012.

It comes as little surprise that the top ten highest home insurance premiums came from London. The London area has one of the highest burglary rates in the country, with 13 burglaries per 1,000 population.**

The capital is the most densely populated area in Great Britain, and with more people comes a higher crime rate. Add to that the fact that almost everything is more expensive and to an insurer, London becomes a high risk area with a high price tag to match.

For example, Barnes is an affluent and desirable area populated by celebrities like Brian May and Robert Pattinson, and its expensive housing ultimately results in a higher premium since the houses are going to be more expensive to repair or rebuild.

Top 10 highest home insurance premiums (excluding London) in 2012

Excluding the capital, the more expensive house insurance prices tend to be clustered around cities like Birmingham, Manchester and Hull. The East Yorkshire area, including Hull, was hit hard by the 2007 floods and has been affected by smaller scale flooding in 2012.

Similar problems were seen in Boston, which was hit by flooding in June 2012. Lincolnshire council has since spent £90,000 bolstering the flood defences of the town, but these areas in the east of England might always have problems since the majority of the areas sit on a floodplain [Source: Environment Agency].

Top 10 lowest home insurance premiums for 2012

Although 9 of these 10 areas are on the coast, they’re also in areas that have a significantly lower risk of flooding than some areas with the higher premiums – proof that living on the coast doesn’t automatically mean that you’re at risk from flooding.

These areas are also in more remote areas with a much lower population (Aberdyfi, for example, only has 800 residents). As befits the small, sleepy, seaside towns, these areas have less crime than the larger cities, meaning less risk in the eyes of insurers.

What factors influence these prices?
Looking at these hotspots, there are some factors that seem to influence the prices, so it’s worth watching out for these when house-hunting:

House prices – the more affluent the area, the more you’ll have to pay for your house, and the higher the cost to repair or rebuild it should you have to make a claim.

Flood risk – Houses that are built on a flood plain can be left with a high rebuild cost if flooding affects the area. Use the Environment Agency’s Flood Map to get an idea of how well-defended an area is from flooding: maps.environment-agency.gov.uk.

Crime rate – The more instances of burglary, arson, vandalism and theft there are, the higher risk an area becomes. Inner cities and densely populated areas will naturally have a higher crime rate compared to smaller, rural towns.