The value of your property

As well as the level of cover and the extent to which your property is insured against the various risks, a number of other factors can come into play when it comes to determining your premium.

The importance of postcodes when it comes to household insurance premiums should not be underestimated. A nationwide survey from the AA showed that the cost of household insurance varies my more than 300 percent, depending on the area in which you live. If you want to cut your premium, the most effective thing to do is probably not to change provider, but to move away from Britain's major conurbations.

The cost of buildings and contents insurance does not stay static year on year. The buildings insurance element is often index linked, which means that premiums rise in line with the retail price index (RPI). Social trends can also affect premiums; several years of high aggregate national claims levels can result in higher general levels of premiums. This can result from widespread increases in crime, or a series of natural disasters, both of which will lead to lots of insurance payouts.

There are a wide variety of things you can do to reduce the premium that you pay for your household insurance:

• Shop around! Choosing your policy and provider carefully is the first step in getting the deal that is best for you.
• Buying buildings and contents insurance as a package should result in a lower overall costs. The insurer can deal with one combined policy more efficiently than two separate insurers could deal with the administration of two policies.
• Don't over insure. Make sure that both the rebuild cost and contents inventory are accurate. If you are sure that the standard set level of contents cover is too high, find an insurer who will insure you for a lower level of cover.
• Make sure that you need all the cover that you are getting. There is no point paying for cover of the shed or garage contents if you do not have a shed or garage. Asking for this cover to be removed should reduce your premium.
• Consider raising the excess that you will have to pay in the event of any claim. There may be a separate excess for the buildings and contents components of your insurance, as well as for individually disclosed items. The excess is usually higher on buildings insurance (often as high as £500), to reflect the higher average value of buildings insurance claims. The downside of raising your excess is that it becomes financially impractical to make a claim for a small amount.
• Improve your home security. Make sure that you fit locks to your windows and doors and consider having a burglar alarm fitted. Unfortunately, different insurance companies can have their own unique requirements as to the type of security system that they require you to have installed. Find out from them before you install anything.
• If there is a local neighbourhood watch scheme, join it. This can knock a surprising amount off your premium - sometimes as much as 10 or 15%.
• If you have had household insurance in the past and have not made a claim, make sure that the insurance company are aware of this. No claims discounts increase with time, as they do with car insurance. You could be paying anything up to 20 or 30% less than a first time insurer after five years without a claim.
• If you can pay a whole year's premiums in one go as opposed to monthly payments, this could knock a further chunk off the total amount that you have to pay. Sometimes, paying premiums monthly involves a separate finance agreement, where the APR can be as high as 30 percent on top of the cost of the premium.

Bear in mind that not all these discounts will necessarily be offered by an insurer. If you live in what they consider to be a really high-risk area, it may be a requirement for you to have security systems fitted and be part of a neighbourhood watch scheme just to get any insurance at all, let alone a discount.