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Home insurance at risk for half a million properties in flood areas

18 June 2008 / by Daniela Gieseler
More than half a million homes could become uninsurable unless the Government ensures that adequate flood protection works are carried out, according to the Association of British Insurers (ABI).

ABI has identified 517,000 properties as being at 'significant risk’ of flooding, and while insurers agreed to offer home insurance for those properties at a price reflecting the risk for the time being, the premiums might become unaffordable for many homeowners in the future.

Many insurers said they would only be prepared to provide cover for houses in flood areas if the Government put sufficient flood defences in place. However, these plans are currently under review, and if the risk of flooding increases significantly it might entail a steep rise in home insurance premiums or the houses might become altogether uninsurable.

The research by ABI also revealed that twelve months after last year’s floods three quarters of Brits believe that not enough is being done to prevent similar catastrophes, although nearly two thirds of the general public think the danger of floods is increasing.

Nearly all respondents (98 per cent) thought that improving drainage should be the top priority in order to reduce the flood risk, as half of last year's flood-related insurance claims were made because of damage caused by water coming up through drains.

Other measures should include stricter planning controls for new-builds and more investment in flood defences. Nine out of ten people believe that if the authorities continued to allow new houses to be built in flood risk areas, adequate flood defences should be provided.

Three quarters of Britons agree that the Government’s target of building 3 million new homes by 2020 should be lowered if it meant that more homes would be at risk of flooding.

At today's Floods – One Year On conference, Nick Starling, ABI's Director of General Insurance and Health, said: "These findings reinforce our call for a long-term flood management strategy. In particular we must tackle the problem of surface water drainage.”

“Planning for the future is essential if we are to minimise a repeat of last year's terrible floods, and to ensure that flood insurance protection remains widely available.”

Simon Douglas, director of AA Insurance, also called the Government to take action: "While I believe the insurance industry responded well to last year's disaster and is well prepared for any future events, it is vital that the Government continues to invest in flood defences while local authorities should not bow to pressure to provide housing stock by giving planning permission to build in high flood risk areas.“

„In addition, last year showed that many drainage systems are inadequate to deal with prolonged rain and it's also vital that local authorities assess future flood risks and invest in effective flood drainage management.“

Mr Douglas also urged all consumers to check if their home insurance policy offered adequate cover for flooding: “Last year's events showed that flash flooding can occur anywhere with about half of claims coming from homes that are not regarded as being at risk. To ensure you're not left high and dry check you have a watertight insurance policy. “

©Fair Investment Company Ltd