Property insurance for flooding

Until recently if your property had a history of flooding or it is considered at risk of flooding you may have had problems with insurance for your home. You might have found it difficult to secure cover from an insurance provider, or you may have found that the insurance premium or excess were at an unaffordable level. For the majority of residential property, this should no longer be the case as in April 2016 the Government and the Insurance industry introduced Flood Re. If your current insurance policy began before 1 April 2016, it may be worth speaking to your insurer and asking if you can transfer your policy to one in which the flood risk element is underwritten by Flood Re.

However, business premises and residential properties built after 1 January 2009 (there are a few other exceptions described on the Flood Re web site) don’t fall within the scope of the Flood Re scheme.  This section provides some guidance on what you can do to find affordable insurance cover for your business (or home if it falls outside the scope of Flood Re). 

If you are finding it difficult to secure affordable insurance you can try “shopping around” for alternative quotes or try using a local insurance broker* who may have experience with properties at risk of flooding. Insurance brokers usually have access to many insurance providers and can search on your behalf. Speak with your friends, neighbours or other businesses in the area to find out the name of their insurance provider. You can also try contacting your local Member of Parliament (MP) who may be able to help you with your case.

You can also contact the National Flood Forum and the Cornwall Community Flood Forum for further information:

The National Flood Forum*

The National Flood Forum provides practical support on insurance:

Visit the National Flood Forum website or call 01299 403055.

Their website includes links to the British Insurers Brokers Association as well as the Association of British Insurers (ABI). It also includes a link to a booklet developed by Defra called “Obtaining flood insurance in high risk areas”.

The National Flood Forum provides information on brokers that have signed up to its insurance protocol.

The Cornwall Community Flood Forum may be able to provide further guidance if you contact us directly. Please find the contact details on this page.

* Please note a cost may be associated with using a local insurance broker or any services provided directly or indirectly by the National Flood Forum. Cornwall Council and the Cornwall Community Flood Forum cannot accept any responsibility for any loss incurred by following guidance provided here.

Remember, finding affordable insurance is not limited to sourcing an affordable premium. The excess on your insurance policy is the amount you will have to pay upon making a claim. For example, if your policy carries a flooding excess of £5,000 you will have to pay that amount in order to proceed with the claim in the event of a flood. Consider whether you will be able to afford that payment before committing to your insurance policy.

The availability of insurance is important after a flood event. Firstly, buildings insurance usually covers the cost of drying out, repairing and restoring your property and its fixtures and fittings. It may also cover other costs such as; legal fees, professional charges and surveyor costs. If your property has been flooded it may not be safe to live in while it is dried out or repaired which can take weeks or even months. Your insurance policy will usually cover the cost of you to live elsewhere during this time. Secondly, contents insurance will cover the cost associated with repairing or replacing damaged equipment, furniture and other possessions.

The availability of insurance for a property may have implications on the ability to secure a mortgage and the ability to sell the property, which may in turn affect its value.

If you run a business, your insurance policy may also cover the cost of any business interruption to help protect your income while the damage is repaired.

If you cannot afford flood insurance it is suggested that you do not forgo buildings or contents insurance altogether as this may leave you exposed to the risk of other eventualities such as fire or theft.

The Statement of Principles is an agreement between the British Government and the insurance industry through the Association of British Insurers (ABI). It obliges insurance companies to offer flood cover through standard policies.

It says that flood insurance will continue to be made available to households and small businesses where the risk of flooding is moderate (typically not worse than 1 in 75 years). Similarly, flood cover will continue to be made available where the risk is worse than 1 in 75 years provided the Environment Agency has informed the ABI of plans to reduce that level of risk within 5 years. The Statement of Principles does not apply to homes built since the 1st of January 2009, therefore there is no obligation for insurers to provide flood cover in these cases.

The SoP works by subsidising the cost of insurance for properties at risk of flooding. Other properties not at risk of flooding may pay slightly more to share the cost. This means that owners of properties at risk of flooding may be paying a premium that does not reflect the true market cost associated with their level of flood risk.

The current Statement of Principles was established in July 2008 and expires on the 30th of June 2013.

It is unclear exactly what effect the expiry of the Statement of Principles will have on insurance policies. However, the two key possible outcomes are:

  1. For properties considered at risk of flooding it is possible that their insurance premium and excess may rise to reflect the level of risk.
  2. It is also possible that properties considered at risk of flooding may not secure flood insurance altogether (this is estimated to account for 250,000 homes nationally).

The important aspect of the Statement of Principles is that it does not refer just to properties that have a history of flooding, it actually refers more generally to any property considered at risk of flooding.

For more up-to-date information about the SoP and the state of talks between the Government and the ABI please go to the Association of British Insurers website.