The Royal Institution of Chartered Surveyors warns that if you can’t get home insurance, you’re in big trouble. Mortgage lenders do not lend on homes that are uninsurable, which can cause the value to drop by up to 80%.
It is a high flood risk that will most likely make your home uninsurable. According to a recent survey, 6.5 million homes are already at risk of flooding, of which 1.5 million are in high-risk areas. The government has completed flood defenses in many such areas and another 80,000 homes are due to be protected this year. But concerns have also been raised about a further 120,000 new homes planned for the Thames Gateway, which may be in a high “risk” zone. Yet many areas remain vulnerable. And if global warming continues, the 1.5 million at risk could grow to 3.5 million by 2030. As early as 2003, the Association of British Insurers (ABI) endorsed principles requiring UK insurers to provide home and contents insurance for properties in areas identified as being at risk of flooding once every seventy-five years or more. Ruiter was that the flood defense had to be there already or would be ready at the end of 2007.
The Department for Environment, Food and Rural Affairs (DEFRA) is responsible for the development and maintenance of these flood defences, but there are serious concerns within the insurance sector that insufficient progress is being made. As a result, insurers have warned the government that insurance coverage could be widely withdrawn if progress is stepped up.
In the meantime, the insurance premiums of those in areas threatened by floodwaters could rise. While the insurance industry agreed to provide insurance coverage, their commitment was simply to keep premiums at “reasonable” levels. But there was no definition of what “reasonable” means. As a result, premium increases of 60% are common, with increases of 400% in bad areas. In a small number of cases, coverage has been withdrawn altogether, mostly in rural areas where DEFRA considers the cost of defending a cluster of a few houses unprofitable.
Environmentalists warn that unless DEFRA puts on its skates, the UK’s current flood damage bill could rise from £950m a year to £3.2bn. After all, the average insurance claim for household flood damage is £30,000 – that’s even higher than fire damage. And local events such as the 2004 flood in Boscastle, Cornwall, could cost insurers more than £15 million.
If you are unsure whether your property or proposed property is in a flood risk area, please visit http://www.environment-agency.gov.uk. This is DEFRA’s website where you can check if they think your house is flooding. Their maps were originally designed for planning purposes and provide information on a zip code basis.
While many insurers use the DEFRA information, others, such as More Than, have their own flood maps. These rate homes individually rather than zip code areas. This means that if your existing insurer raises your flood risk premium and uses the DEFRA information, you may still be able to get a cheaper rate from an insurer using its own flood data if the data shows that your property is outside the risk area. zone.
The ABI has recently increased pressure on DEFRA to accelerate the construction and improvement of flood defences. It has warned that the insurance industry may not continue to comply with the 2003 principles if the government does not increase its spending on flood defences.
That would be bad news for many homeowners.