Flood insurance argument could leave millions high and dry

Following the recent weather in the UK, Castlemead Insurance Brokers thought that this post would be topical as recent figures suggest that 200,000 homes in England and Wales could be left without cover as agreement between insurers and government ends.

About 5m homes are at risk from flooding across Britain, according to the ABI, with up to 200,000 homes in England and Wales being warned they will struggle to obtain adequate flood insurance after June 2013, when the insurance industry's voluntary flood agreement with the government ends.

The current flood insurance statement of principles agreement with the government, agreed in 2000 as a short-term measure, ends in June 2013. It states that insurers must include flood cover as standard for properties built before 1 January 2009, where the risk of flooding is low; and, crucially, insurers must allow at-risk households who already have flood cover to automatically renew cover with the same insurer, as long as flood defences are planned to be in place within five years.

The ABI's director general, Otto Thoresen, said this "grossly distorts the market" because people in lower risk flood areas pay more to subsidise those at higher risk. "Customers in high risk areas are tied to their existing insurer, and those insurers covered by it have ended up with a disproportionate number of high flood risk properties."

Commercial Properties are also being affected with insurers using flood mapping systems to identify buildings in high risk areas. Increased premiums and excesses are being imposed with cover being withdrawn for flood in certain areas.

If you need help with your insurance, please get in touch with us and we will be happy to assist.