Household insurance soars in London

Household insurance is now up to three times more expensive in London than other areas of Britain due to soaring crime levels.

A survey of annual insurance premiums found prices in many areas have spiralled in the past 12 months.

The findings, by AA Insurance, reveal parts of the inner-city have been worst hit by the price hikes, such as Walworth in south-east London, Hackney and South Lambeth.

Indeed, insurance in some of these areas is more than double the price of the so-called smarter places.

For example, contents insurance for a semi-detached home in Twickenham with three bedrooms is £158.76 a year, whereas for a similar property in Peckham it is 150 per cent higher at £385.32.

More surprisingly, there are wild variations in the cost of buildings insurance. In Kilburn it is £341.17 but in Twickenham it costs just £168.14.

Industry experts claim that although the cost of rebuilding the house may be the same wherever it is, the threat of subsidence, flooding and storm damage is greater in some postcodes than others.

The report calculates how much insurance on a three-bedroom semidetached house would cost in every area of Britain. Homeowners have to pay both buildings and contents insurance whilst those who rent pay only contents insurance.

The prices are the average offered by a number of insurance companies and for each postcode better and worse deals could be found.

The survey found that in 2002, the average price of contents insurance was £158 and buildings insurance was £157. But in London, the increased risk of burglary means contents cover costs £250 whilst buildings cover costs £232.

A spokesman for the AA said: "In London theft is a big issue, which pushes premiums up. And buildings insurance is higher because the price of rebuilding a property is a lot more.

"Subsidence is also an issue and a lot of claims in this field in the last year has helped to push up prices."

On average, the cost of insurance in London has increased by around three per cent in the last year whilst contents insurance has reached its highest price in almost six years. Experts have denied the cost of the 11 September terrorist attacks to the insurance industry has been passed on to consumers. A spokesman for the Association of British Insurers said prices had edged up due to a surge in claims last year.

"Our figures show theft claims topped £400 million last year and of course there will be areas of London where that threat is greater," he said.

"There has been a huge rise in claims for fire damage as well. And there is also the increase in flood risk. The detailed information about the risk of flooding in the capital which has recently emerged will push prices even higher."

But it is not all bad news for Londoners. Some areas that have received heavy investment and a purge on crime have had lower premiums this year than last.

Areas of the East End which have been developed to accommodate City workers, such as Bethnal Green, Bow and Poplar, have all seen the cost of contents insurance fall. For example, Bethnal Green premiums have fallen from £349.69 to £342.64.

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