Hundreds of thousands of homeowners living in areas of the UK which are prone to flooding are now able to get cheaper home insurance following the introduction of the Flood Re scheme.
Here’s how it works and how it could help you…
What is Flood Re?
Flood Re is what’s known as a ‘reinsurance scheme’, set up by the Government and the insurance industry. It was introduced in April 2016 and basically offers insurers a way to protect themselves against big losses, so they can offer affordable cover to homeowners whose properties are at risk of flooding.
Policies are sold to home insurance customers in the usual way, but the risk carried by these policies is passed onto the Flood Re scheme.
Under the scheme, homeowners affected by flooding make a claim through their insurers as usual, and the insurers then recoup their costs from Flood Re.
The flood-related part of home insurance policies will be capped depending on council tax bands, so a combined buildings and content policy will cost no more than £210 for Band A homes, rising to £276 for B and D homes and £1,200 a year for homes in Band H.
Flood Re also offers insurers a £250 excess per policy, which is likely to be much lower than the excesses that people living in flood-prone areas have previously paid.
How many homes will use Flood Re?
According to the Association of British Insurers (ABI), Flood Re will be used for the 1-2% of properties which are at the greatest risk of flooding.
Around 350,000 homes fall into this category and should now benefit from more affordable home insurance to protect them in the event their property is flooded.
The ABI says fully repairing and restoring a flooded home can cost between £20,000 and £45,000. During the floods of 2015/16, nearly 10,000 homeowners made claims on their home insurance to pay for repairs to their homes and to replace damaged possessions.
Who’s paying for Flood Re?
The Flood Re scheme collects an annual tax from home insurers, who contribute £180m to a fund each year, which is managed centrally.
If insurers opt to pass on these costs to customers, those not living in flood-risk areas can expect to pay around £10.50 more a year on their buildings or contents policies. This is only an average though, so some people will probably see much lower increases.
How do I know if my home is eligible for Flood Re?
Speak to your insurer and ask them if your property qualifies for the Flood Re scheme. Some insurers, including Direct Line, are writing to customers who are likely to benefit from Flood Re to let them know how the scheme works and explain who is eligible.
Are there any properties which are not covered by Flood Re?
Only a few kinds are property are excluded from the Flood Re scheme.
The Government is keen to prevent further property development on flood plains, so any homes built since 2009 won’t be covered by the scheme.
It also excludes homes that are let and leasehold flats. However, if you are a tenant buying cover for your home contents, the Flood Re scheme will protect you.
Owners of commercial properties, such as shops and restaurants, are also excluded from the scheme.
How do I know if a property I’m thinking about buying is likely to flood?
Ask the estate agent if the property has ever been flooded.
You can also check the Environment Agency’s postcode search tool to see whether the property is at risk of flooding.
The ABI says that people looking to buy should be given more up-front information about a property’s flood risk. It wants estate agents and property search websites to automatically provide traffic-light style information showing the flood risk for the locations of the homes they list.
How to minimise flood damage and what to do if the worst happens
If you live in an area which is at risk of flooding, keep a close eye on weather alert services so you have some advance warning as to when you are likely to be affected.
Keep a supply of sandbags in your garden shed or nearby to block off your doorway during periods of heavy rain, this should help limit the amount of water that can get into your property.
If it is looking likely that water is going to get in, take any valuable items upstairs as quickly as you can.
Once flooding has occurred, get in touch with your insurer as soon as possible and let them know what’s happened.
Take their advice on when you should start cleaning up – sometimes they won’t want you to do this until they’ve sent a loss adjustor to visit and assess the damage.
Take pictures of any damage to your home and its contents as soon as possible as this could provide valuable evidence when you submit a claim.
Where can I find out more?
Contact your insurer or visit the website www.floodre.co.uk to find out more about the Flood Re scheme.
You can find out further information on how to minimise the impact of flooding on your property at www.gov.uk/prepare-for-a-flood.