Scheme designed to bring affordable flood insurance launches
About 350,000 households living in high flood risk areas should now have better access to affordable home insurance.
Flood Re, which launches today (4 April), has been set up by the Government and insurers to enable households to get affordable flood cover over the next 25 years – allowing time for the Government, local authorities, insurers and communities to become better prepared for flooding.
Ultimately it will still be down to insurers to set prices – 17 have so far joined Flood Re – with the scheme funded by a levy on them.
The scheme is expected to reduce the price households pay due to a combination of insurers being able to pass the flood risk element to Flood Re to pay for in the event of any claims, and policyholders now being able to shop around in a more competitive market.
However, it’s only available to homes in the UK built before 2009, which are insured by the individual homeowner (not a company), and which have a council tax band.
Brendan McCafferty, chief executive of Flood Re, says: “We have been working tirelessly to ensure we’re ready so that consumers can start benefitting from greater choice and more competition in the insurance market.
“This should make flood cover more affordable and accessible to those in high flood risk areas over time.”
Home insurance premiums for those living in flood risk areas are typically £29 (24%) more than the national average of £121, while those who’ve made a claim for flood damage typically see premiums rise by 213% – adding £320 to the cost of cover each year, according to MoneySupermarket.
The comparison site adds that the average claim during seven recent flood events was a whopping £22,339.
- Make sure when taking out insurance that you don’t underestimate the value of the contents of your home.
How do I know if Flood Re affects me?
A lot of people who live in a high flood risk area will already be aware of it, but there are online flood risk maps available that you can use to check if your home is at risk. Your insurer or insurance broker will also be able to tell you.
If you are at risk, the Association of British Insurers (ABI) recommends speaking to your existing provider to check what you’re covered for and how much you’re paying. You should then shop around to see if you can get a better deal.
The ABI says comparison websites generally suit people with standard needs, so you may be best going directly to individual insurers for quotes for a property with a flood risk. You can find a list of the insurers using Flood Re on its website (floodre.co.uk).
Mr McCafferty adds: “Consumers should check the Flood Re website to see which insurers are signed up, speak to their current insurer and be prepared to shop around.
“When buying a policy they should make sure it is the best one for them, not just the cheapest.”
It’s worth being aware that when taking out insurance and if you ever need to make a claim, you’ll only need to contact your insurer – Flood Re works in the background.
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Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.