The cost of protecting homes after being victim of a flood could rise considerably as insurance companies raise bills. Some homeowners are being hit with a 500% rise in their insurance bills and told to foot the first £6,000 of any future claim themselves.
The shocking insurance hikes are revealed in a report by consumer charity the National Flood Forum. The report is being prepared for a pivotal summit next week between the Government, the insurance industry, local authorities and the consumer charity to discuss how to ensure home insurance can continue to be widely available for those in flood risk areas. It surveyed 300 flood victims and discovered that, on average, they had suffered a hike in their premiums of 500%. One in ten of these households had flooding excluded from their cover when they came to renew their insurance – even though insurers agreed to continue providing cover to existing customers in homes at a high risk of flooding until 2013.
The devastating floods in 2007 and 2009 caused an average of £70,000 worth of damage to affected homes. There are differences in the excesses insurers are imposing, they could vary from £350 to £6,000 and premiums also rise.
Mary Dhonau, chief executive of the National Flood Forum, says: ‘There’s no consistency in the treatment of flood victims by insurers. And you can’t simply move to another insurer, as they don’t want you. We found Axa, Aviva and Halifax were worst for raising premiums and excesses. The biggest danger is what happens after 2013. If you can’t get insurance, no one will give you a mortgage and you can’t sell your home.’
The Environment Agency believes as many as one in six homes in England and Wales could be in danger of flooding. Yet it has already had its budget for flood defences cut by £30m this year to £629m. The Government insists the cuts have come from savings by meeting targets on flood defences ahead of the deadline. For every £1 spent on shoring up rivers and improving coastal defences, £8 is saved on repairs, according to Environment Agency figures. But it’s not just rivers and seas that cause flooding; poor drainage of surface water following heavy rains is also a danger. The problems in Hull and Tewkesbury in 2007 were caused by a combination of river and surface water flooding. Fixing the problems of surface water is the responsibility of local authorities, but grants for flood defences are not ring-fenced.
Malcolm Tarling, of the Association of British Insurers, says: ‘Insurers want to continue to offer flood cover to all customers. Premiums and terms have to reflect the risk and the evidence is that the risk is getting greater. Flood claims are traumatic and expensive. That means excesses and prices have to go up.’
While most major insurers insist they will continue to insure flood-risk homes even without planned flood defences, one insurer, Esure, which does cover existing customers at risk of flooding, is remarkably open about its stance.
Its spokesman Adrian Webb says: ‘We are not an insurer for flood-risk postcodes. We have lobbied the Government for nearly eight years to improve flood defences.
‘We cover flooding in areas where it is a genuine accident, not an accident waiting to happen because of nearby undefended water sources. Insurers do not cause floods, neither do they build defences.’
The British Insurance Brokers Association has a helpline for those struggling to find insurance (0870 950 1790) and says flood specialist Bureauinsure.co.uk provides cover in 95% of cases.
Source : This Is Money
