Posted 07/04/2016
The UK government has announced it will team up with big players in the insurance industry to help lower the cost of insurance premiums for homes at high risk of flooding. Named ‘Flood Re’, This change is expected to affect up to 350,000 homes in high flood risk areas across the UK. This new flood initiative has the aim of allowing vulnerable individuals to purchase insurance at affordable prices while still covering them in cases of floods.
For the average home owner across the UK with home
insurance, this new change could mean an annual raise in home insurance bill by
up to £10.50, even for people not living in flood risk areas.
For people living in flood risk areas, this means that
should they ever need to claim in the case of a flood, they will be exempt from
large premiums just to ensure that their home and possessions are protected.
Those claiming from floods will have their policy excesses capped at £250 for
no less cover, meaning more peace of mind. This can mean a drop in excesses by
as much as a third for those in particularly high risk areas.
When claiming on insurance due to a flood, the homeowner
doesn’t have to do anything different, it’s handled on the side of the
insurance company.
For insurance companies, all this means is that following a
flood claim from their customer, they would simply process the claim as normal,
and then ask for a refund from a pool of money taken from an annual industrial
levy of around £180m on the insurance industry. This money is paid for by the
£10.50 on average raise to home insurance prices across the country.
The scheme will start with around 17 insurance companies on board, although a lot more are expected to follow soon. Businesses and landlords are excluded from the initiative as well as property built since 2009 to try and stop people building on high risk lands simply because it’s now cheaper to insure.
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