Home buildings insurance premiums rose 1.8%, while the cost of contents cover fell by 2.6% over the first quarter of 2010, according to the latest AA British Insurance Premium Index.

But the cost of a combined home and contents policy rose by 3.4% - suggesting that some of the "buy one get the other at a discount" offers are drying up, the AA says. It is the floods and storm damage claims that are scaring insurers. And rightly so. The damage can be staggering

The yearly figures tell the true picture

Average quoted premiums for buildings cover rose by 12.2%;
Contents cover rose by a modest 2.1% over the year;
The cost of a combined policy rose by 13.9%;
The annual Shoparound premium movements for the year saw buildings rise by 6.7%; contents by 1.6% and combined by 7.6%.

Simon Douglas, director of AA Insurance, says: "There have been several damaging weather events over the past year - from golf ball-sized hailstones to tornadoes and, over the winter, damage from ice and snow.

"Severe damage from storms or floods means extensive and expensive repairs to buildings while the work must also meet current building regulations on, for example, re-wiring or insulation.

Contents will have to rise

He also said contents premiums would have to rise. "Many commentators have been warning of increasing costs and eventually this must lead to rising premiums. It would be better for insurers to introduce gradual premium price rises to avoid the kind of sharp hike we have seen in the motor market."

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