31 May 2016

How crime rates can impact your home insurance

When searching for a new home you’re likely to be focused on vetting local schools, checking out your daily commute – or walk home from the pub – and whether you can afford that extra bedroom.

Whatever your criteria, researching the potential price of insurance probably isn’t top of the list.

Our short guide to one of the key risk factors – crime rates – could help make your insurance more affordable in the long-run.

It’s not just areas prone to flooding or subsidence that can affect premiums; crime rates are one of the most common and important factors that insurers consider.

Claims can buck the general trend

The latest figures from the Crime Survey for England and Wales (CSEW) (PDF) showed an 8% decrease in crime against households from the previous year, the lowest estimate since it began in 1981, with UK vehicle crime at a 20-year low according to the Home Office.

One of the reasons for this is that burglars are becoming more sophisticated, says Nationwide Product Manager Darren Black. "Burglars are increasingly selecting high-value, portable items and can make use of social media to identify homeowners who are on holiday. This means that while the overall crime rate has decreased, the insurance industry’s exposure to theft – or the value of the claims that they pay out for – may not have."

In some parts of the UK, reported crime has plummeted by double digits; in Northern Ireland bicycle theft fell by 25.7%, while domestic burglary fell by 13% in London and car theft by 11% in both the South East and South West of England.

Domestic burglary in the North East of England, for example, rose by 4% between 2014 and 2015 despite an overall decrease of 7% across the country. Within the region itself, an increase of over 25% was reported in Cleveland.

For those who live in Scotland, crimes recorded by the police decreased by 5% overall. Across the country the largest drop was in Moray (18%), but Stirling saw a 9% rise and East Ayrshire 4%.

Glasgow City, for example, has seen a higher-than-average decrease of more than 3,000 crimes (6%), but because of its size it continues to account for 19% of all recorded crime in Scotland.

Postcode searches such as those available on police.uk or UKCrimeStats can be useful in giving you a general picture of recorded crime in your area, but be aware that a low reported crime rate does not automatically guarantee a low premium.

What else do insurers consider?

"Despite the fact underwriters consider crime statistics provided by the local authorities when setting premiums, just looking at crime rates for your postcode will not necessarily give you a good indication of how it will impact your premium," says Darren.

"Insurers will have a much more detailed view on their exposure to burglary in any one area and will also be considering other factors."

"In central London you can have two streets that are back to back, sharing quite similar postcodes but very different burglary rates. Your premium will depend on the property and the claims experience that the underwriter has in that area," he says.

External factors such as weather and trends in the claims market, previous claims you may have made, the number of people living in your house and level of security are also likely to be considered.

You may be able to gain some idea of the crime risk in your area from a postcode search or by getting prospective insurance quotes, but the most important thing that you can do is make sure that you have good home security.

This could actually offset the fact that an area has a relatively high crime rate, commented Darren.

"Make sure that all of your locks conform to BS3621, all of your windows have locks and be aware that most insurers will offer discounts for being in an active neighbourhood watch area and having a good alarm. The best alarm you can have is one that is fully-integrated and alerts the local police station."

Researching local crime rates can give you a general view of crime in your area, but taking the time to secure your home and find good quality home and car insurance policies are vital steps to protecting your lifestyle.

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