As if things weren’t hard enough for the thousands of people whose homes were flooded or destroyed by the winter storms, they face likely increases in their insurance premiums at their next renewal.
Insurers were quick to reassure those affected by the storms that they will be covered under the terms of their current policies, but the Association of British Insurers has warned there is nothing to stop premiums going up in future.
One solution is Flood Re, an insurance scheme agreed last year by the government and insurers, which will give cover to 500,000 households in the worst affected parts of the country.
Footing the UK’s flooding bill
This would be subsidised by every household in Britain paying into a £180m annual pot. But the scheme won’t come into effect until 2015, when it becomes law as part of the Water Bill, leaving many homes in the interim with no access to affordable home insurance.
And there are some glaring issues with the new scheme. Under the current proposal, Flood Re will exclude many homes, chiefly those in the top council tax band or built since 2009. Properties that flood too often or are deemed too high risk would also be omitted.
There is further discomfort for those who do qualify for it, with one government study estimating that the Flood Re fund has a 58% chance of going into deficit in the first 20 years. However, something is better than nothing.
With thousands of homes affected by the floods, especially over the Christmas period, the message from flood victims to the Government is clear – help is needed sooner rather than later.
Are you in a flood risk area? If you have a question about flood insurance, ask it in the comments below and we’ll do our best to get it answered.