Flood Risk Insurance
Flood risk Insurance for high-value homes can be a difficult area to navigate without knowledge, experience, and access to appropriate markets and underwriters. Here at McLeod Insurance we are experts in High Value Home Insurance and offer a bespoke, tailored approach to flood risk insurance for your home.
How many Properties are at Flood Risk in England?
Around 5m (or a sixth) of the properties in England are considered a higher than average flood risk. This figure is on the increase with the long-term effects of global warming sure to have an impact. The flood risks come from sea, river, rising groundwater, sewer problem or flash floods. Historically, Underwriting around these problems can be tricky for Insurance Companies.
Insuring High Value Property in High Flood Areas
Insuring a property that is in a high flood area can be challenging. For many years Insurers have either refused to insure properties in high flood areas, charged an astronomical premium or imposed onerous terms. If you live in an area with a higher than average chance of flooding it is prudent to analysis your home insurance policy, as a standard policy may not adequately cover you in the event of a claim.
This is especially the case if you live in a high value home as the more individual a house the more likely a standard policy does not suit.
If you live in a high value home that is also in a high flood area, then options should be available to you.
Firstly, you will fit the criteria of a High Net Worth Insurer. This will mean that you will have an Underwriter looking at your individual risk and not an insurer that will just look at your general postcode flood risk. Standard ‘one size fits all’ home insurance policies do not look in detail at your specific property but take a broad stroke approach.
Standard Home Insurance policies only consider the area and the type of property and take a much more general view.
Flood Risk Insurance for High Value Homes
If you fit the criteria of a high net worth Insurer then a much more bespoke policy will be available to you. This will help, especially if you have managed the flood risk element yourself to mitigate any loss.
Secondly, you will likely call upon the help of a High Net Worth Broker, such as McLeod Insurance. A good Broker will help you place your business with the correct market, offering the broadest cover for the most competitive premium. Having experience of the high value home insurance market is especially useful when placing your business as the devil is very much in the detail as far as a policy wording is concerned.
What have the Government done to remedy the Flood Insurance situation?
Flood Re is a joint initiative between the Insurance Industry and the Government. Its aim is to make the flood peril affordable to people living in high risk flood areas.
Flood re is a not for profit organisation.
How does ‘Flood Re’ work?
Every Insurer that offers home insurance in the UK is obligated to pay into the Flood Re scheme. The levy raised from these insurers totals more than £180m annually and is used to help pay flood claims.
If Insurers are uncomfortable with the flood risk element of a risk then they can buy the flood cover from Flood Re for a fixed price. Whilst the price for the flood element of a risk is not cheap, it is a much better option than not having flood cover at all.
In the event of a claim being submitted from a client insured with an insurer that has purchased Flood Re, the insurer will pay any flood claim initially and then look to get reimbursed from Flood Re.
This is a clear advantage for the homeowner as it avoids lengthy delays in receiving payments. This in turn means that any remedial work can begin in a timely fashion and your home can be back to normal without the headache of major delays.
- Flood Re was created in April 2016.
- Council tax bands A-H are eligible for Flood Re.
- Expected to be in place for twenty-five years.
- Flood Re was designed to give affordable flood cover to those at the highest risk.
Note: Not all homes are eligible and not all Insurers take part in the scheme. Contact a specialist High Net Worth Broker for details.
How does Flood Re calculate premiums?
Flood Re calculates how much premium to collect on an acceptable flood risk property by which council tax band the property is in. In addition, Flood Re apply a £250 excess to any flood claim.
Will all Insurers consider your property a flood risk?
Not necessarily, all Insurers have different tolerance levels to different areas. One Insurer may consider a property in a high flood risk area and have to purchase flood cover via Flood Re at an inflated premium. Other Insurers may not consider the risk in a flood area and they may be comfortable to cover themselves. This is likely to make them more competitive for a High Value Home. Knowledge of the various underwriters’ requirements can save you in both time and money and is something a good high value home insurance broker can help with.
Are any properties excluded from Flood Re?
The majority of properties in high flood areas will be acceptable to Flood Re, with a couple of exceptions. Properties that are built after 1st January 2009 are not acceptable due to Flood Re not wanting to incentivize home building in high flood areas. In addition, flats in leasehold blocks, that contain more than 4 flats, are also excluded.
Here at McLeod Insurance we have many years worth of experience in placing high value home insurance policies and can help you through the many pitfalls when it comes to flood risk premiums. Give us a call or drop us an email for any help and assistance you may require.
We have put together a list of websites you may find useful when looking to prevent flooding in your property.
Department for Environment, Food and Rural Affairs (DEFRA)
The National Flood Forum
Property Care Association Flood Protection Group
Know your flood risk
Polygon Essential Guide To Flood Planning and Preparation
Give us a call today if you would like to discuss any of the topics discussed here, we are always happy to assist.