The skies are clearing for flood risk properties

Posted: 09/05/2012

Even though flood alerts are in place in many parts of the country, the skies are clearer when it comes to home insurance cover. The Government and the insurance industry are close to an agreement over the ongoing cover for flood risk properties.

The Government are looking into proposals made by the insurance industry that would make cover available to all households, even those in flood risk areas and a decision is thought to be announced in a few months.

The Association of British Insurers are offering all homes in flood risk areas cover however, they want to enforce a cap on the annual premium that they would pay which would mean a property in a flood risk area would get its insurance from a central pot of money. This pot would receive its money from a small amount being taken from every house insurance policy in the country.

The Government are in serious talks about this proposal, deciding the level of cap and the amount of money that would be needed to fund the central pot of money. This proposal is set to address the issue of affordability and availability of home insurance for houses within flood risk areas, not to mention peace of mind for home owners.

The current agreement is called the ‘statement of principles’ whereby insurers will provide cover for flood risk properties as long as the Government continue to invest in flood defences. This agreement is signed by both the Government and insurance industry but it is set to expire next year. If an alternative solution isn’t found, this could leave 200,000 homes without affordable insurance cover and homeowners unable to sell their property.

A Defra spokesman spoke to the Guardian and said,Any targeting of government funding needs to be feasible, offer value for money and endure over the long term.’

Are you in a flood risk area? What are your thoughts on the insurance industries proposals being reviewed by the Government?

Amanda McGovern, Pali Ltd
www.paliltd.com

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