Home Insurance, Flood Alert
The Royal Institution of Chartered Surveyors warns that if you cant get insurance for your house, youre in big trouble. Mortgage lenders wont lend on houses that are uninsurable and as a consequence its value could fall by up to 80%.
Its a high flood risk thats most likely to make your house uninsurable. According to a recent survey, 6.5 million homes are already at risk from flooding of which 1.5 million are in high risk areas. The government has completed flood defences in many such areas and protection for a further 80,000 homes is due this year. But concerns have also been expressed about a further 120,000 new homes planned for the Thames Gateway which are potentially in a high at risk zone. however many areas keep unprotected. And if global warming continues, by 2030, the 1.5 million at risk could mushroom 3.5 million. Back in 2003 the Association of British Insurers (ABI) agreed the principles which committed UK insurers to offering home and contents insurance for similarities in areas which are assessed to be at a flooding risk once in seventy five years or more. The rider was that the flood defences had to be already in place or would be completed by the end of 2007.
The Department for ecosystem, Food and Rural Affairs (DEFRA) has the responsibility of developing and maintaining these flood defences but within the insurance industry theres extensive concern that insufficient progress is being made. As a consequence the insurers have has warned the government that there could be extensive withdrawal of insurance cover if progress is stepped up.
In the average time, those in areas threatened by flood water could find their insurance premiums soaring. Whilst the insurance industry agreed to provide insurance cover, their commitment was simply to continue premiums at reasonable levels. But there was no definition of what reasonable method. As a consequence premium increases of 60% have been shared with up 400% increases in bad areas. In a tiny number of situations, cover has been withdrawn altogether, mostly in country areas where DEFRA considers the cost of defending a cluster of a few homes to be uneconomic.
Environmentalists warn that unless DEFRA gets its skates on, the UK s current bill for flood damage could rise from £950 million a year, to £3.2 billion. After all, the average insurance claim for household flood damage is £30,000 – thats already higher than fire damage. And localised events like the 2004 flood at Boscastle, Cornwall , can cost the insurers over £15 million.
If you are in any doubt whether your home or hypothesizedv home, is in a flood risk area, you should visit http://www.ecosystem-agency.gov.uk. This is DEFRAs web site where you can check whether they think your home is at risk of flooding. Their maps were originally designed for planning purposes and provide information on a post-code basis.
Whilst many insurers use the DEFRA information, others like More Than, have their own flood maps. These estimate homes individually instead of post code areas. This method that if your existing insurer increases your premium for flood risk and uses the DEFRA information, you may nevertheless be able to get a cheaper rate from an insurer using its own flood data if its data identifies that your character is beyond the at risk zone.
The ABI has recently additional to the pressure on DEFRA to accelerate the building and upgrading of flood defences. It has warned that unless the government increases its spending on flood defences, the insurance industry may not continue their commitment to the 2003 principles.
That would be bad news for many homeowners.