Flooding and home Insurance - UK Home Insurance Advice

How does the risk of Flooding affect home insurance?

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Ok, you are about to buy a home. You are looking at many details before choosing your property. You may look at house size, price, number of bedrooms, and whether there is a garden or not. But there is a vitally important question you now need to ask. Is the property in an area at risk of flooding? If it is, then there is a chance you can end up with a house that is not saleable, because you can’t get buildings insurance on it.

In areas that are found to be prone to severe flooding, a potential buyer would not be able to get a mortgage, and a potential buyer who can pay with cash will require a huge discount on the price of the homes, even if they were insurable.

The last time there were a series of floods in the UK, the government made an agreement with insurers for two years from January 1st 2001, in which the vast majority of the homes built on flood plains could still get insurance cover. This affected about 5 million people, which is hardly a small minority.

However, this government agreement expires on December 31st, and the Association of British insurers (ABI) have suggested that it is unlikely it will extended beyond that date.

The agreement committed insurers to offer cover to their existing customers whose homes had been flooded, although it still allowed them to substantially raise premiums and excess levels. The ABI said that they agreed to this in order to give the government some breathing space to build and strengthen the country’s flood defences. However, the £150m of spending that was earmarked in summer 2002 seems to have been two little, too late.

There are two million homes lying on flood plains in the UK. Some insurers may not abandon their existing customers, but others may not commit to that promise. Some insurers have said that they will ask people affected some extra questions. So, do they love on a hill. If they do, they can get extra cover.

For those that the insurers regard as particularly high risk, they may not be able to get cover without getting a surveyors’ report. They accept that the price of cover will go up significantly if this happens, but it’ll be better than no cover at all.

But some insurers have said that they will not insure homes with potential problems. They argue that we they to do so, everyone’s house insurance premiums would have to rise by about £40 a policy simply to pay for the flood claims made in the autumn of 2000.

Ultimately, it is down to the insurers whim. Luckily, you have a lot of companies to ask.