Flood insurance

Flooding has become a major issue for homeowners in the UK during the last decade with climate change becoming more prevalent.

The UK experienced some of its wettest weather in a century in 2012, according to the ABI. It’s estimated up to 8,000 homes were affected by the increase of flooding.

The damage caused totalled a whopping £400 million. This comes as no surprise when figures from the Environment Agency reveal that around 5.2 million homes in England are at risk of flood from rivers and sea. The risk of flooding from extreme weather is a real worry for homeowners.

The ABI (Association of British Insurers) have launched a scheme as of 4th April (2016) called Flood Re.

It’s an initiative to help people who live in flood risk areas get affordable home insurance. This scheme is non-profit and has been agreed by the ABI and the Government.

It allows insurance companies to pass any flood risk associated with policies into a fund, and in the event of a claim, the fund will pay the flood claim.

Every home insurance provider in the UK pays into the Flood Re scheme which raises £180m every year. This levy is used to cover homes that are at risk of flooding.

It only applies to people living in a flood risk area. To find out if it applies to you and more about it, visit the Flood Re website.

If you ever suffer a flood in your home, the cost of your insurance premium is likely to rise in the future. You might also have to pay a larger excess on any claims.

Each company has a different approach when it comes to flood claims and excess. It’s a competitive market, so it’s worth shopping around at renewal to get the best price.

While insurers are committed to offering existing customers flood cover following a washout, new insurers are under no such obligation, and are likely to turn you away.

This can raise issues when applying for a mortgage on a property in a flood risk area, or one that has been flooded in the past.

If you’re buying a property, remember to look at flood risk very carefully. Lenders often require at least a standard insurance policy to cover the structure of the building before they even consider approving a mortgage.

Before buying, get quotes from an insurance company to see whether it will cover you, and how much you have to pay.