Home insurance woe for 200,000 propertiesFlooding risk may not be covered after 2013

31 January 2012

House floods

Around 200,000 houses at risk of flooding may struggle to get home insurance cover from 2013

New research from the Association of British Insurers (ABI) suggests that up to 200,000 homes will face problems in getting insurance when an agreement with the government ends in 2013.

Home insurance problems

ABI analysis has identified the areas with the greatest proportion of homes at flood risk. Boston and Skegness topped the list, followed by the Vale of Clwyd, Folkstone and Hyde and Windsor.

The current agreement between home insurance companies and the government, called the Statement of Principles, guarantees that homes at risk from flood will continue to be insured while the government continues to improve flood defences. 

However, the agreement is due to end on 1 July 2013 and there is no commitment at present to extend the protection. The ABI wants the government to take on some responsibility for funding the insurance of those properties most at risk.

Paying for flood defences

Part of the problem is that it is unclear who will pay for improvements to flood defences. The Public Accounts Committee (PAC) has raised the point about uncertainty concerning funding the improvement in flood defences and protection in the future.

Maintaining and improving flood defences in the UK currently costs around £1.1 billion per year, with the total set to rise. An independent report for the government has claimed that this might increase to between £1.5 billion and £3.5 billion per year by the 2020s.

Decisive action needed

Simon Douglas, director of broker AA Insurance, says: 'Flood protection is a national priority, yet many people in flood-prone areas may find their homes difficult to insure from later this year.  

'People want the government to take decisive action now, to ensure that their homes are protected. But that's not happening with the Environment Agency's budget cut by 10%.'

More on this...

  • Phone the Which? Money Helpline - if you've any problems in getting home insurance or with a claim
  • Making a flood claim - advice on making a flood claim and protecting your property
  • Home insurance - our review tells you all you need to know about home insurance