Flood claims in the UK cost insurers over £446,000,000 in 2014. With the worst of this winter weather yet to come the insurance industry has at last woken up to the fact that many homes, especially newly constructed ones, may not be eligible for flood cover.
A not-for-profit scheme called Flood Re was first mooted in 2013, but it now looks likely to come into effect in mid 2015.
This will be an agreement between UK insurers and the Government. It will allow insurers to pass the flood element of some household policies into a fund that is designed to pay for future flood claims for those policy holders.
The fund will be built up partially by insurers paying a “premium” that is based on the qualifying property’s relevant Council Tax band. This will typically be between £210 and £540 per year.
In addition all home insurance policy holders will have to pay a levy into the fund, currently estimated at £10.50 per policy, per year. This apparently is not an additional amount, although one cannot see in the long run how household premiums will not rise as a result of this levy.
Whilst welcome, this initiative will only apply to the less opulent sections of the population. Properties falling in England’s Council tax band H (and their equivalent in Scotland, Wales and Northern Ireland) will not qualify for Flood Re protection, even though they will be contributing to the fund.
Properties built after 1st January 2009 will also not qualify, nor will Leasehold Blocks with more than four residential units; there are additional restrictions applying to Blocks of Flats, especially if the freeholder does not live there. Commercial properties will also be excluded, although if you live in a commercial leasehold property you may be able to qualify for Flood Re protection under a General Contents policy.
You can find further information by visiting the Association of British Insurers’ web site. (www.abi.org.uk) The material above has been extracted from their report “The future of flood insurance: what happens next?”
So, what can you do in the interim, or if your property is not going to qualify for this scheme protection?
Most insurers continue to supply flood cover to existing policy holders, but this is by no means universal, particularly where the Environment Agency has done little or nothing to improve flood protections or where future flood claims appear inevitable.
Buildings2Insure and Anthony Wakefield & Co. will be looking at ways of providing Flood insurance in future, with or without the assistance of Flood Re. Already we have assisted clients who have adopted radical methods to protect their properties against flood and in a future blog we will illustrate some of the ways that existing and new properties can be made relatively flood resistant.