It's A Good Time To Buy Insurance

The prices of lots of goods and services are rising at the moment, but it's a different story when it comes to insurance.

Food's getting pricier, credit's getting more elusive and your wallet's probably feeling that bit lighter.

So it's good to be able to report that when it comes to insurance, things are looking up.

According to the latest research, home and car insurance prices have stalled rather unexpectedly. And better still, travel and life insurance are now cheaper than ever.

I'm going to look at what's going on - and why you should take advantage of cheaper premiums as soon as you possibly can.

Home comforts

Hikes in home insurance premiums were widely expected following last year's disastrous floods. However, according to the latest British Insurance Premium Index from the AA, these price rises haven't fully materialised.

In the first quarter of 2008, average buildings insurance premiums actually fell by 0.2%, and they're still only 4.5% higher than when the Index started in 1994.

Average combined home and contents insurance premiums fell by 1.4% during the same period.

According to Andrew Strong of AA Insurance, the slight fall in premiums for buildings cover can be explained by a rise in the number of risks not being quoted by some insurers, as they become more sensitive to flood risk.

Car premiums stall

The floods were also expected to affect the price of car insurance - and the AA's index report does reflect this: In the last year, the average annual premium quoted for comprehensive car insurance has risen by nearly 6%.

The good news is that the latest figures show a slight reversal in the trend. Average comprehensive car insurance premiums fell by 0.5% in the first quarter of 2008.

According to AA Insurance, this is largely due to the time of year. Because it's currently a `peak period' for car insurance sales, many companies are holding rates down to try and gain market share.

And the bad news?

You might need to act fast to take advantage of these blips: Home and car insurance premiums are expected to rise again over the coming year.

And in the longer term, prices may be forced up still further by extreme weather conditions. Professor Stuart Lane of Durham University recently predicted that we're entering a `flood-rich' period, with even more serious flooding likely to hit the UK in years to come.

A good time to get away

On a brighter note, if it's travel insurance you're after, there's some really good news. According to financial researchers Defaqto, most travel insurance policies have never been cheaper.

The vast majority of single trip and annual travel policies have fallen significantly in price in the last year alone. For example, the average premium for a single, week-long, family trip to Europe has dropped by 6.2% since 2007.

And the average annual cover premium for a single person travelling in Europe has dropped by 6.7%.

We've got increased competition to thank for these falls. The huge number of policies now available online has triggered something of a price war between insurers -- and made it a real buyer's market for Fools who shop around.

The time of your life

If you're looking for life insurance, you'll be pleased to know that these premiums have also fallen - in fact plummeted -- in recent years.

It could make sense for you to try and exchange your old plan for a new, often much cheaper one: the average cost of life cover has fallen by 50% over the past decade.

Two main factors have caused these price falls: The life insurance market has become fiercely competitive, and people are living longer (therefore posing much less of a risk to term-assurance companies and helping to drive premiums down).

Get sorted now

It seems that now is a good time to take out a new insurance policy. This is particularly true of car and home insurance, as premiums are likely to rise - possibly steeply - in the months to come.

If your current policy is up for renewal, remember to shop around rather than automatically renewing with your existing company. You're likely to get a much better deal as a new customer.

And if you are thinking of switching policies early, make sure you check what cancellation or early termination fees apply, so you don't get a nasty surprise.

Good luck!

More: Why Insurers Ask So Many Questions! | Save £2,238 On Your Life Insurance

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