Many of those whose homes have been hit by flooding won’t need telling how hard it can be to find affordable home insurance. Or any cover at all for that matter.
However, their predicament moved a step closer to being resolved just before Christmas when the Government and insurance companies finally reached an agreement on how to guarantee insurance cover for flood-risk homes.
Why is the scheme needed?
While Britain has always been something of a wet and windy place, the impact of climate change appears to have increased the frequency and intensity of flood events in recent years.
Because of this, insurers have found it difficult to provide affordable insurance to homes that are deemed to be at risk of flooding and have experienced floods in the past.
Essentially, the chances of some homes flooding is now so great that insurers have to ask huge premiums to cover the risk, while some homes are deemed too risky to insure at all.
How will the new scheme work?
The Association of British Insurers (ABI) estimates that between 300,000 and 500,000 homes are, under the current system, either finding it difficult to obtain affordable cover or any cover at all.
Under the new plans, known as ‘Flood Re’, if a home is at particular risk of flooding, and insurers feel the risk is too great for them, the extra cost of insuring the property will be passed on to the Flood Re scheme.
The extra charge will be based on a home’s council tax band and, as such, will be an ‘affordable’ fixed premium, helping those owners of flood-risk homes who currently face the huge insurance charges.
How much extra will flood-risk homes have to pay?
All council tax bands will now be included (before the highest rates bands weren’t), and premiums will start at £210 for homes in bands A and B, rising to £540 for homes in band G.
As it’s only just been agreed that properties in the highest bands of H and I will also be included in the Flood Re scheme, no premium has yet been set for these homes.
The Chief Executive of Flood Re, Brendan McCafferty, expressed relief that agreement had been reached on behalf of thousands of householders, saying “this agreement allows us to progress beyond the design phase so that Flood Re can become a reality
New-builds not covered
Unfortunately, new homes built after 2009, and deemed to be at risk of flooding, will not be covered. This measure has been included in an attempt to stop developers building homes on flood plains.
When will Flood Re start?
There is still not set start-date for the Flood Re scheme, but it’s expected to begin operating around the second half of 2015.
How to get the best deal if you live in a home at risk of flooding
If you live in a flood-risk home, it’s probably best not to use online comparison sites as you want to make absolutely sure you have the right cover in place.
The Government’s financial advice site, Moneyadviceservice.co.uk, says ‘If flood risk is an issue for your property, it’s best to bypass the comparison sites altogether and get some expert help’.
It goes on to recommend using a specialist insurance broker, saying ‘An insurance broker can help you negotiate with insurers and arrange cover, even if the risk of flooding is high’.
It’s a view Policy Expert would wholeheartedly endorse. We’re aware of the issues involved and work with a number of high quality insurers to get you the right home cover at the best possible price.
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