Insuring Your Flood Risk Home
We might have just had a particularly dry July, but wet weather is becoming an increasing problem for many householders in the UK. Flash floods after storms are becoming annual news stories, complete with TV news footage of helicopter evacuations and the resulting damage to homes. One in six of us live in an area at high risk of flooding, and while most of those that do will never actually see a torrent of water entering their homes they'll still have to pay a premium for home insurance.
After a long period of negotiations with the government, the Association of British Insurers announced at the end of July that their members would be providing affordable insurance for those in flood prone areas. The deal involves the government increasing spending on flood defences and insurers imposing a levy on all home insurance policies, so that they can still provide insurance at affordable rates to those at risk of flooding.
This might not be such a great deal for those with home at little risk of floods, but if your home is in one of the 17% of homes categorised at high risk then you'll likely see a fall in your flood insurance premiums. Around 200,000 homes (source) are insured with flood insurance cover currently which was a product created by a previous deal between insurance companies and the government. The current deal means that these flood insurance policies will continue to be offered, thanks to the levy on homes of everyone of around £10.50 per year.
Flood insurance premiums are capped according to your council tax band. The lowest bands, A and B, will only pay £210 a year while the second highest band - G - will be charged £540 in premiums. Sadly for those with the most valuable homes, banded at H, there will be no cap on premiums as the government didn't want to be seen to be subsidising the rich with a tax on everyone. There are some exceptions though. If your home was built after 2009 in a flood prone area you won't be eligible for the insurance, as the government is trying to discourage new developments in flood risk areas.
The new deal is a great improvement for those living in at risk areas. Before the new arrangement there was no cap on premiums, meaning that some of the most at risk properties were paying as much as £20,000 a year in premiums.
If you're not certain if you live in a flood risk area that easiest way to check is on the Environment Agency website. Here you'll find a flood risk map showing if your home is at risk of flooding from either rivers or the sea. Insurers use their own data rather than this as they factor in other forms of flooding such as from drains, but it's a good way of checking before getting a quote.
While the new maximum premiums are great, they also will often be the minimum premium you'll pay. Unless your insurance cost less than the new maximum, it's likely that you'll be paying the maximum the insurer is allowed to charge as the amount you'd be charged if there wasn't a cap would be far higher. However if your premium isn't at the highest, or if you're not eligible for the cap due to having a H council tax band house there's a few things you can do to reduce your premium. Insurers will give you premium discounts for taking anti-flood measures such as installing flood boards.
Flood risk might be primarily something that you think of when getting home and contents insurance, but floods can affect other insurance policies too. Flash floods especially can cause damage to vehicles that won't be covered by home insurance policies. If you live in an area that's at risk of flooding, especially flash flooding, then you should ensure that your car insurance policy covers flood damage. Many comprehensive car insurance policies will do so, but others will have exceptions. This makes comparing car insurance policies a little more difficult as you'll need to read the small print but it's important not to lose out if your car is damaged in a flood.