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Home insurance in England
A recent decision by the Appeal Court means that the cost of compensation
for some of the flood risk in England and Wales needs to be covered
by the water companies, rather than the consumers or the insurance
companies. This could lower the risk for the home insurance companies,
who can start to share the burden of the problems associated with
floods.
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The actual case was against Thames Water. The potential cost that
Thames Water could incur because of this ruling could reach about
£1bn, which is over three times the profit that it earned
in 2000/2001. It would also have knock-on implications for other
water companies throughout the UK, as they would become more vulnerable
to similar claims.
The plaintiff was a man from Stanmore, which is in Middlesex in
North London. Sewage had flooded the man’s property since
1992.
The original High Court decision had made the water companies and
other statutory sewerage undertakers liable for the compensation
of all those in England and Wales whose homes had been affected
by sewage flooding. Steps would also have to be taken in order to
carry out alleviation schemes for sewage flooding with no regard
to cost.
This is good news for those people who live in flood-risk areas,
because with the chances that risks will be shared between the insurance
companies and the water suppliers, it gives them a chance to be
able to get home insurance.
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FOR ONLINE QUOTES
Movement on this has already began, with some insurance companies
allowing over 250,000 homes that had been previously excluded back
onto the list of homes that are insurable. This followed a review
of flood risk and defences. This particularly helps thousands of
homes in Greater Manchester and parts of the north west, as well
as Southampton, Portsmouth, North London and Herefordshire.
The original decision to exclude homes with an unaddressed flood
risk had been taken to allow the insurance companies that did so
to bring their premiums down. The insurance companies undertook
analysis, which concentrated on areas where flood defences had been
built or strengthened in the years preceding their decision.
Revised digital maps were used which provided new flood data, enabling
the insurance
companies to cover more homes without having to raise other customers’
premiums by including areas where the flood risk has not been addressed.
This means that over 15,000 new postcode areas were re-introduced
to the list of areas qualifying for cover. This was, according to
one of the main companies, a way of making insurance
affordable for the ordinary person and household, and also “making
sure that insurance remains insurance”, in that it covers
events which are not likely to happen.
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