Where are we with flooding insurance?

We have reported in earlier newsletters regarding the issues surrounding home owners in flood risk areas being able to secure buildings insurance.

Apart from the emotional, practical and financial devastation of a flood, subsequent difficulty in being able to obtain cost effective buildings insurance can affect the future saleability of your home.

The Government and the insurance industry had an agreement in place called the 'Statement of Principles' under which, broadly, the insurance industry agreed to insure flood risk properties at reasonable rates. This agreement expired on 31 July 2013. Since that time, flood insurance rates have been increasing and a number of householders have found their insurance leaping to unsustainably high levels.

Flood Re is an agreement in principle between the UK Government and the insurance industry which is intended to deal with this issue in the future. The basic idea is that households across the UK will pay into a collective fund through their home insurance premiums. That fund will be used to offset the costs of flood damage. It had been hoped that the new system would be set up in summer 2015.

However, analysis of the progress of the legislation through Parliament makes it clear that actual implementation of the scheme is more likely to be in 2016/17. Under the implementation of Flood Re, the insurers agree to continue to offer insurance to previously flooded or at risk properties at a sustainable cost level.

Unfortunately, not all properties will be covered by the new scheme.

If you are living in a property which has previously flooded or is in a flood risk area and you are proposing to sell it before the new Flood Re scheme is introduced, you should carefully consider what information you hand to a buyer. It is important to make a full disclosure to a buyer of all relevant information relating to a property. You may wish to contact your building insurer to ensure that buildings insurance will still be available for your property in the future. You may need to consider adjusting the sale price of your house if buildings insurance is likely to be prohibitively high.

Making detailed preparation prior to marketing your property can help to smooth the sale process.

To discuss this or other property related issues, contact us.

Internet link: http://www.floodre.co.uk/