Government offers flooding insurance to high-risk households
The UK Government has teamed up with the insurance industry to help lower the costs of insurance premiums for up to 350,000 homes in flood-hit areas across country.
The Flood Re initiative will allow vulnerable properties to purchase insurance at affordable levels with the outlay covered through an annual industrial levy of £180m on the insurance industry. The scheme could raise average home insurance bills by around £10.50.
Homeowners living in high flood-risk regions will be exempt from paying large additional premiums to ensure their homes and possessions are protected, with their policy excesses capped at £250.
Flood Re chief executive officer Brendan McCafferty said: “This should make flood cover more affordable and accessible to those in high flood risk areas over time.
“Consumers should check the Flood Re website to see which insurers are signed up, speak to their current insurer and be prepared to shop around. When buying a policy they should make sure it is the best one for them, not just the cheapest.
“If you are in a high flood-risk area then Flood Re may also mean having a choice of insurance provider for the first time in many years. Again, shop around and see what cover and prices you are offered.”
The cost for insurers to pass on the flood-risk to Flood Re is calculated according to the council tax band of the house. Insurance for those most at risk – council tax Band A – starts at £210, going up to £1,200 for Band H homes.
The scheme will start with 17 insurance companies taking part, although more are expected to follow in the coming weeks. Businesses and landlords are excluded, as are houses built since 2009 to discourage developers from building on land at risk of flooding.
Government Floods Minister Rory Stewart said: “Flooding is devastating. Nothing can take away the distress it causes. But affordable flood insurance will help people get back on their feet more quickly and secure their futures. So the government and the insurance industry have worked together to establish Flood Re to provide affordable excesses and premiums for people in flood effected homes.
“It is great news that Flood Re is now open for business. It is fantastic step forward – making flood insurance affordable for people regardless of where they live.”
Winter of discontent
The scheme comes as a welcome announcement for homeowners in flood-stricken areas, especially in the aftermath of the extensive flood damage that devastated UK towns and villages last winter.
Last week, Local Government Association (LGA) research revealed that nearly £250m in damage was caused to key infrastructure such as roads, bridges and drainage systems by the winter floods, although the final bill could be significantly higher.
A separate LGA report showed that local authorities across the UK need substantially more financial support from the Government to enable local authorities and their communities in order to make a recovery.
Earlier this month, the Department of Environment, Food and Rural Affairs (Defra) unveiled its five-year plans which revealed that the Government sector will invest £2.3bn by 2021 to better protect more than 300,000 homes from flooding.
A report last week from the UK Health Alliance on Climate Change revealed that up to 8% of health care buildings in England are currently operating in flood risk zones, with as many as 2,000 hospitals, care homes and GP surgeries are at risk of river and coastal flooding.
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