November 11, 2011
Insurers set to Refuse Cover to ‘at risk from flood’ Properties
It emerged today that as of June 2013, insurance providers are much less likely to approve cover for properties deemed to be at risk from flooding, a decision that could leave over 200,000 homeowners with uninsurable properties.
The Association of British Insurers agreed to continue insuring homes considered to be at risk from flooding via a ‘Statement of Principles’ which they entered into with the UK Government. The deal was made with the proviso that the Government would spend extra money improving major flood defences, but according to a spokesman for the ABI this has yet to happen and so they ABI has no choice but to end the agreement.
The result is that as of June 2013 some homeowners will see excessive increases in their insurance premiums, and some will be refused cover altogether. It is thought that premiums could quadruple and that excesses could be set at £15,000 to £20,000 for a run-of-the-mill insurance policy. Over one quarter of residential properties in the UK are considered at risk from flooding, and it may be that all owners of properties with even the slightest ‘at risk’ label will find it difficult to find cheap home insurance.
The question has to be then, if properties in places like Hull and Cumbria become uninsurable what will happen to house prices in the area? Leading on from this, will mortgage lenders also refuse to lend on a property at risk from flooding knowing it will be virtually impossible to insure?
For owners of at risk properties the outlook is bleak and unfortunately there is very little they can do to improve the situation.
