Owners of properties in areas where flooding is common are nervously awaiting the coalition government’s spending review in October.
Defra, the Department for Environment Food and Rural Affairs, is responsible for maintaining and improving the UK’s flood defences. But its budget will be one of those affected with cuts of up to 40 per cent due to be announced next month.
Insurance industry insiders warn that homeowners in the areas most affected by floods could see the cost of house cover soar if spending on flood-prevention measures is not maintained or increased.
The current deal
At present, owners of properties in flood-affected areas are benefiting from a deal between insurers and the government.
An agreement known as the Statement of Principles on the Provision of Flood Insurance was drawn up between the Association of British Insurers (ABI) and the Labour government in 2008 following heavy floods across the UK in the previous year.
Under the deal, insurers agreed to continue offering cover to existing customers until 2013, providing the flood risk is being adequately managed by the government.
But, many fear, if spending cuts mean the risk is no longer “adequately managed”, the agreement could be rendered null and void, and many homes could be simply refused insurance altogether.
Climate change
Government spending cuts, however, are not the only potential problem for those who live in areas where flooding is common.
If changes to the UK’s climate make floods more widespread, or more acute, the country will need even more spending on defences just to maintain the status quo.
Without this, many homes will become uninsurable.
Environment minister, Caroline Spelman acknowledged as much in a recent speech, saying that Britain needed to plan for the fact that there would be an increased frequency of severe weather events in coming years.
Simon Douglas from AA Insurance said premiums were already being increased due to insurers’ concerns about flood and storm damage claims in the future.
He said: “Historically, both home buildings and contents insurance premiums have remained relatively static, but are showing signs of upward movement. Buildings insurance has on average risen by about 13 per cent over the past year.
“If investment in defences – and that includes ensuring storm drains are kept clear and are improved to remove surface water – is not maintained, insurers will become increasingly fussy about who they insure and premiums will inevitably increase."
Further consequences
Being unable to get home insurance, or seeing premiums rocket, are not the only consequences of living in an area which does not have adequate flood defences.
Without buildings insurance, lenders are unlikely to extend a mortgage. And your home could prove difficult or impossible to sell, or suffer huge falls in value.
Is your property at risk?
The Environment Agency website has a flood map, showing which properties are most at risk across the UK.
If you’re planning to move house, this is a useful tool so you know whether or not you risk higher buildings insurance premiums in the future.
Getting the right insurance
If you do live in a property which is at higher risk of flooding, Confused.com can help.
Earlier this year, we became the first price-comparison site to compare non-standard risk cover, including insurance for homes with high flood risk or those which have been affected by flooding in the past.
This means that many homeowners who would be turned down by mainstream insurers will still be able to get cover.
Other non-standard risks include properties which have suffered from subsidence, or which are also used as places of business.
Visit the Confused.com website for our home insurance comparison.
