Buildings Insurance went up again last year, costing homeowners another 1% a year, taking the average to just over ?205 for a year's insurance. Contents insurance also went up, this time by 2% - now it costs the average homeowner ?151 a year. However, some lenders are hiking prices even higher than that ? Norwich Union for example, raised its prices by a whopping 6% last year.

The question is - why? There's so much competition out there, you'd expect prices to be falling, not increasing ? but there are other forces at work, as we go on to discuss.

No 1 ? the cost of having a house repaired or rebuilt

Labour and building materials are getting more costly, so when the insurance company calculates how much it would cost to rebuild your house, prices are higher. This is due to inflation, and the same thing affects the insurance company and its own operating costs. Wages, bills, office rental ? all these costs are increasing year on year ? so of course insurers have to factor these in.

No 2 ? the weather

The British weather is getting more and more tempestuous, whether it's due to global warming we are not qualified to say, but it's a fact that we have been experiencing a lot of extreme weather in the past few years. The 1987 hurricane was a freak occurrence, but flash floods such as the incident in Boscastle, Cornwall, Helmsley in North Yorkshire, and Carlisle are making the headlines on a regular basis. The Association of British Insurers has stated that the average insurance claim due to flood damage could be anything from ?15,000 to ?30,000, making huge dents into the insurance industry's profits. In fact, floods cost insurance companies millions every year.

No 3 - Burglary

Claims due to burglary have been going up, now average at around ?1,400. The 2 main causes are:

? From digital cameras to laptops, game consoles to ipods ? our houses are full of electronic gadgets with a high value bought new, and a high value resold. Burglars are after these items and it's hitting the insurance industry where it hurts ? their pocket.

? Burglars pick posh neighbourhoods to ensure they get away with the best items - with expensive items like jewellery for the taking, the value of these kind of claims is increasing.

Insurance companies use statistics relating to a postcode area to calculate premiums for everyone in that area. If your neighbours have suffered subsidence, or your area is near a river which has been known to flood ? you will have to pay higher premiums. Similarly, if people in your area have been broken into, then it will be assumed that you are at a higher risk of making a burglary claim too.

Having a no-claims discount is a help when it comes to offsetting the annual rise in premiums, but insurance companies cap these discounts once you have 5 years no claims, so you will not get any further discounts.

So is there any way to avoid the rising cost of home and contents insurance?

The first thing you can do is look around for the best deal. Try the Internet for the best deals, because most insurance companies offer a discount, often 10%, for customers that buy online. You will also save if you pay by direct debit. It's tempting to accept your current insurer's renewal quote but don't be fooled ? the small amount of effort it will take to shop around will pay good dividends. One of the reasons for this is because insurers always offer their best deals to new customers, existing customers are virtually penalised for showing loyalty!

Improving your home security is another good way to reduce premiums ? while giving you essential peace of mind. Neighbourhood watch schemes, external security lighting, a burglar alarm, security locks on windows, and industry-recognised locks on external doors will make a difference. Obviously these things cost money to install, but they pay for themselves in the long run.

Play the insurance company game and you will always win ? shop around, be prepared to move insurance company every year, and don't accept any high prices. There's always a better deal out there!