There was good news this summer for home owners worried about the costs of insuring their property against the risk of flooding.
According to a report in the Financial Times on the 18th of July 2017, coverage given by the Flood Re scheme is to increase by 50%, extending the effective subsidy on insurance premiums for home owners who live in areas subject to flooding.
As the name suggests, Flood Re is a reinsurance scheme for insurers, who pay a premium for cover against the risk of flood claims from their customers. The safety net provided in this way allows participating insurers to reduce the cost of covering the risk of flooding granted by home insurance policies.
The scheme was introduced in April of 2016, through a joint initiative by the insurance industry and the government, after successive winter storms led to a significant increase in flood damage and the costs borne by insurance companies as a result.
As a reinsurance scheme for insurers, Flood Re works very much in the background, so that individual customers have no immediate or direct contact with Flood Re. Instead, all of their dealings – including flood insurance claims – continue to be made with their insurance company or broker in the normal way.
Why might I need flood insurance?
With Flood Re in place, and set to expand, why might I still need specifically designed flood insurance?
- not all insurers participate in Flood Re;
- although an estimated 127,000 homes currently qualify for help from the Flood Re scheme, even the planned increase in its coverage takes the total number of home that might benefit to just 190,000;
- only private residential homes are eligible to participate; and
- the home must have been built before the 1st of January 2009 (or first built before that date, even if the property was subsequently demolished and rebuilt).
As a result, you may be living in a home which does not benefit from Flood Re assistance, has suffered flooding in the past, or is vulnerable to flooding in the future.
Although these are risks you may check for yourself through the government’s own flood planning map, some insurers may still decline home insurance, exclude flood cover or charge a high premium for covering the risk if your home is considered to be high risk.
In other words, you may still need specialist flood insurance.
Even though you might have found it difficult securing adequate cover against the risk of your home flooding – or are asked to pay an especially high price for that protection – there are still specialist insurance providers who have particular expertise and experience in securing just such cover, at a competitive market rate.
These specialist providers have developed close working relationships with insurers who are accustomed to providing cover for high-risk properties and have developed their own strategies for marketing their flood insurance policies at a competitive rate. That competitiveness is aided of course by the large number of such specialist providers who also participate in the Flood Re scheme.