Flood insurance in a flood risk area

Blog Post by Christina Worsley 12 October 2015

The winter of 2013 to 2014 was the wettest on record with over 7,800 homes and nearly 3,000 commercial properties flooded. The cost to the insurance industry was a staggering £446 million.

In response, many household insurers have become reluctant to offer flood cover to properties located in high flood risk areas.

It’s important that property owners have both buildings and contents insurance in place for the property. Flood cover will usually be included if you’ve confirmed assumptions such as your property isn’t located within 200m of a watercourse or a body of water.

Gaining flood insurance from general insurers can be difficult, specialist insurers will provide ‘all risk’ policies for properties in high flood risk areas, fully evaluating the property rather than underwriting based on assumptions;

  • Local geography
  • Local flood protection
  • Whether the property has previously flooded
  • The likelihood of it flooding – insurers have four categories of risk: high, medium, low and very low
  • Whether you’ve signed up for the Environment Agency Flood Warning Direct service – a requirement by most household insurance flood insurance specialists.

According to the British Insurance Brokers’ Association (BIBA) cover for flood risk properties is more expensive, costing around 25% more. However, this is relative to typical flood claims that are very large (average insurance claim in 2014 was £28,000). In addition to this, comprehensive insurers offer good alternative accommodation/loss of rent cover which is very important if your home is uninhabitable following a flooding incident.

Flood Re

The UK Government Flood Re scheme will change the way flood cover is priced, however this has yet to be finalised. It’s anticipated that it will be fully operational in 2016.  The scheme will essentially cap the flood element of insurance premiums and should bring down the cost of cover for homes prone to flooding. Under the terms of the scheme the flooding element of household insurance premium will be capped based on the council tax band of the property. The scheme will be funded through a charge of £180 million to all UK insurers, this equates to a levy of £10.50 on everyone’s household premium.

Difficultly with insurance further emphasises the need to understand your flood risk, be prepared and have a plan.  A recent statistic from the Environment Agency indicated that for every £1 spent on protection from flooding saves £8 spent on repairs. 


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