UK Home Insurance - Flood Areas

Flood areas

Have you ever seen what a flood can do? It's quite scary the damage a flood can cause. Not only whilst it goes on, but its after effects can be devastating, both for the state of your property but also your health.

And yet, many people only seem to care about the number of bedrooms a property has, or whether there is a garden. If they don't know about the risk of flooding in an area, they could find themselves saddled with an unsaleable, uninsurable home.

A potential buyer would simply not be able to arrange a mortgage to buy a home in an area prone to flooding. They would find it almost impossible to get home insurance, which is a prerequisite of many lenders, and so you would have to go to the cash buyers' market. These people, even if they can somehow get insurance, will demand a massive discount on the price of the home to cover their risks.

From January 1st 2003, an agreement between the government and insurers will no longer stand, meaning that the vast majority of homes built on flood plains will not longer be guaranteed insurance on their homes. This agreement was made after the last series of serious floods in the UK in 2000, and ran for two years from January 1st 2001.

It affected over 5 million people, and existing insurance customers were guaranteed insurance to cover their homes that had been previously flooded. It did allow the insurers to raise premiums by a large amount, along with the mandatory excess levels, so more of the risk was shared.

The Association of British Insurers (ABI) said that insurers were agreeing to this to give the government some time to strengthen existing flood defences and build new ones. For some reason though, the government waited until the summer of 2002 to start this, and the £150m they spent at that time may be not enough and too late.

The UK's insurers have not committed to anything past January 1st 2003, and it remains to be seen if the 2 million homes on the UK's flood plains will find themselves without cover this year. Not all of them will be abandoned though. Insurers have indicated that they will ask extra questions, such as if the home is on a hill, which if true will enable them to get extra cover.

Surveyors will be getting a lot of business thrown their way because of all this, as if you want insurance and live on a flood plain, you will likely need to get a surveyor to provide assurance to the insurer. From then on, it's down to the whims of the insurer. Luckily, there are so many that you still have a chance.

Flood areas

© AskFinancially.com 2008

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Flood areas

© AskFinancially.com 2008

Contents Insurance

Insurance & Loans

Copyright