Reasons why your premium could change

If you’ve recently gone to renew your policy and noticed an increase in the premium, you’re not alone. Your premium may have gone up in price for a number of reasons. So, if you’re looking to understand why your premium may have gone up this year, we’ve pulled together some of the most common reasons for premium increases.

Inflationary increases

We are witnessing unprecedented increases in the cost of goods and services across the economy. Rising energy prices are a big factor in this, but we have also seen prices rising due to supply chain disruption, these factors are pushing up the cost of building materials and labour. This rising inflation means it is now more expensive to complete repairs to properties. This means paying out on the cost of a claim could be more expensive, which is one reason why you might find your premium has gone up.

You’ve made a claim during your policy term

Making a claim won’t affect the price of your insurance straightaway, but you may see an increase when it’s time to renew. As you would expect, people with fewer or no claims tend to pay less for their insurance. Some of our products use the number of claims as a rating factor, not just the cost of claims – so even small value claims can influence your premium. It is also worth noting that the frequency of claims generally is increasing as we see more storm and flood events, this also impacts premium levels more broadly.

Promotional discounts have ended

If you had a promotional discount when you initially joined us, it’s possible that the offer has now ended. Often an introductory offer or discount can be as much as 20% and tend to only apply for your first year of cover. If your discount has ended, you’ll be paying the full amount for your policy.

Why a change to your details could change your premium

It’s important to make sure your details are up-to-date and correct so that we can ensure you’ve got the right cover. It also means we’ve got the right information to sort things out if you make a claim.

Telling us about any changes, big or small, means you pay a premium that accurately reflects the risk – that’s why you’ll see an increase or decrease in the price. If you don’t tell us about any changes, your policy may not be valid. It’s easy to tell us about any changes by logging into your AXA Account.

Here are some examples why your premium might change when you update your details:

Change in property

With our Landlord policy we can insure you for up to 10 properties on one policy. If you’ve acquired new properties since your last renewal then the premium will have increased to cover these. The locations of any new properties could also affect your premium. For example, properties in areas susceptible to subsidence or flood risks may cost more to insure than others.

Property renovation

If you’re making big changes to your property, this could change the rebuild cost, and it’s important to let us know. You can update the rebuild cost for your property in your AXA Account. If you need help calculating the rebuild cost, use the Association of British Insurers’ rebuilding cost calculator as a guide, or contact a qualified surveyor or valuer. Once updated, we’ll then calculate any changes to your premium to make sure you have extra cover for the extra space. It is also important to consider the impact of inflation on your sums insured; these are index linked to account for this but always worth reviewing to make sure the sums insured are still accurate.

Rental rates

If your landlord insurance covers loss of rent, changes to the rent you charge could affect your insurance cover. This usually means that the higher the rent is for your tenants, the higher your premium will be. If your rent intake has changed since your last renewal, your insurance premium may also change.

What the money you pay covers

Trying to understand your insurance premium can be confusing - especially when it changes. It's important to us that you know where your money is going. So, we've broken it down to make it as simple and clear as possible.

Claims

Paying claims is at the heart of what we do - that's the single reason you buy insurance. So, you can rest assured that when you buy with us, that's where the biggest chunk of your premium goes.

Expenses

It costs to keep the lights on. Like any business, expenses are necessary to keep us running. That's why some of your premium goes towards our employees' salaries and the cost of our offices, as well as investing in the most innovative technologies to make your experience with us as smooth and simple as possible.

Insurance Premium Tax

The Government adds 12% tax to your insurance premium. Unfortunately, IPT cannot be claimed as a business expense. However, we work hard on making sure the Government understands the impact this tax has on customers and to persuade them that 12% is more than enough.

Profits

Every business has to make a profit to exist - we're no different. But the profit we make is not as much as you might think. That profit means we can keep on protecting you and your properties, year after year.

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Reinsurance / Industry Levies

Like all insurers, we pay into various industry funds that have been set up to protect you, the customer. For instance, the Financial Services Compensation Scheme protects you against an insurer going bust.