Don't get caught out by floods this winter
In recent years, floods in Cumbria, Devon, Yorkshire and Wales have dominated the headlines, with whole towns and villages suddenly finding themselves deluged in water.
And it's not just a problem affecting a minority of households. In fact, a staggering one-in-four British homes are at risk of flooding, according to Risk Management Services – and things are likely to get worse.
With so many more of us at risk, getting home insurance that includes flood cover is essential – but not always easy.
For example, insurers might designate your area as high-risk if you've been flooded before, so you could find yourself with massively loaded premiums or, in the worst-case scenario, discover that your property is completely uninsurable.
"The definition of a flood risk is a problem," says James Sherwood-Rogers, managing director of Landmark UK Property, a company that provides environmental risk information.
Sherwood-Rogers explains that at the moment the likelihood of a property flooding is judged according to the Environment Agency's data (the official source of weather statistics).
This looks at flooding from rivers and seas but not pluvial (rainwater) flooding. This is a major issue. "In recent years, the biggest risk with floods has come from rain. Weather patterns are changing, and evidence from the Met Office suggests that the pattern of shorter, heavier bursts of rain is set to continue," Sherwood-Rogers says.
The Environment Agency is looking to include data that will cover pluvial flooding, but according to spokesperson Ken Hunt this is still a long way off. "We are the first country in the world to start tracking this data," he says, "but it's at a very early stage."
So, for now, the majority of insurers will class a property's flood risk based on the current data, taking into account proximity to flood plains but disregarding any other specifics.
Peter Coling, technical director for surveying at Kinleigh Folkard & Hayward, explains: "Insurers take a blanket view. They don't look at individual properties." That means a property that is on the top of a hill, 300 feet from a tiny stream, could still be classed as a flood-risk property.
Watch our TV episode 'Protect your home from flooding' below...
Hairdresser Nicola Langford, 44, and her 50-year-old husband Kim live with their three children in Calcot, Berkshire.
We've lived in our home for 24 years, but a couple of years ago our home insurance premium with Barclays suddenly jumped from £475.83 to £932 a year," says Nicola. Assuming Barclays had made an error, she called her insurer, but was told that her house was on the edge of a flood plain and the increase reflected this.
"It's scandalous," Nicola says. "I called the Environment Agency and asked how it can make such a decision when it's never seen my home?" The house is six feet above ground level, and a 600-foot long garden and a row of conifers separate it from a railway line, behind which lies a field with a small stream.
Eventually, Nicola and Kim managed to find a specialist insurer, Bureau Insurance Services, to provide cover for their ‘riskier' property at a slightly better £700.
"There's complete inconsistency," says Neil Cook, an insurance broker for Equity & General, specialists in finding cover for the uninsurable.
I've seen cases where one person couldn't get cover but their next door neighbour still pays the same as they did before flooding." He gives the example of insurance quotes of up to £18,000 a year in Ulverston, Yorkshire, where his client managed to get cover for £400.
He also warns against consumers trying to find the cheapest priced policy that in the end doesn't offer sufficient cover in the event of a claim.
Cook argues that insurers see the consumer as little more than a policy number, but the Association of British Insurers (ABI) says that its members are doing their bit to protect homeowners in flood-prone areas.
"The industry's statement of principles is in place until 2013, and it states that existing customers have to be offered some kind of cover by their insurers," says spokesperson Malcolm Tarling.
But what happens after 2013? Some flood campaign groups have called on the government to set up a fund to help people whose homes have been flooded, but realistically this just isn't feasible.
In September the Department for Environment, Food and Rural Affairs held a Flood Summit to see how the insurance industry could best support its customers. In response to the meeting, ABI released a statement announcing that "insurers are determined that flood cover continues to be as widely available as possible".
However, there is nothing to stop insurers hiking up the premiums and payable excess. As Tarling himself says: "Of course insurers will set a premium that matches the risk."
By doing this, are insurance companies holding customers to ransom? A National Flood Forum survey of flood victims revealed that 51% of respondents had seen their excesses increase on flood claims – the average was £4,700 – while 60% had seen their premiums increase.
After the floods in Morpeth, Northumberland, in 2008, retiree Alasdair Turnbull saw his home insurance premium increase from £216 to £398, with an excess of £2,500 from insurer Castle Cover.
But at the end of 2009, he received a letter saying that Castle Cover would not be renewing his cover because "the value of the claim no longer comes within the underwriting criteria for our low-risk policy". Castle Cover isn't a member of the ABI, and so was free to abandon existing customers in the event of a flood.
The 63-year-old now had to try and find cover for a property classified as at ‘significant' flood risk by the Environment Agency's flood scale – defined as a more than a one-in-75 chance of flooding in any year. Alasdair was with faced extortionate premiums or an uninsured home.
"Aviva offered me cover for £1,443, but I live in a modest two-bedroom terraced house. With Christmas approaching and my cover running out in January, I was panicking: would I even be able to get insurance or sell the house in the future?" he says.
The Environment Agency calculates that 500,000 homes could become unsaleable due to flooding. "In the worst case scenario, insurance companies will run for the hills and people's single biggest investment will become worthless. This could blight whole towns," warns Mary Dhonau, chief executive of the National Flood Forum (NFF).
As a flood victim herself, Dhonau says not a day goes by when the NFF doesn't receive phone calls from people saying they can't get insurance. And this can also affect the ability to remortgage.
Alasdair did eventually find cover, for £643 a year – half of the first quote – after contacting the NFF, which put him in touch with insurance broker Peter Cook.
So what can you do if you're struggling to get flood cover? It's always worth approaching specialist insurance brokers such as Peter Cook, as they are able to search the whole of market for the best cover for you.
Some of the large insurers, such as AXA and all its intermediaries (John Lewis and Sainsburys as well as MORE TH>N/Royal Sun Alliance), will also look at individual properties to calculate home insurance costs. This means you'll get a quote that reflects your circumstances more fairly.
Dhonau adds that people who are prone to flooding should concentrate on flood resilience measures to reduce the need to make an insurance claim.
Of course, many people do have a positive experience with their insurers. But while there are plenty of good stories out there, the number of bad ones highlight the lottery that flood insurance can be: cover today, gone tomorrow.
Will flooding affect my mortgage?
The consequences of an uninsurable home are more far-reaching than not having adequate cover in the event of a flood claim.
Although contents insurance isn't essential to get a mortgage, lenders won't offer homeowners any deal without buildings insurance – and it is this type of insurance that is more of a struggle to get if you're at risk of flooding.
"From the point of view of the lender, it wants to be secure in the knowledge that any money lent is protected," says David Hollingworth, mortgage expert at London & Country. "If you can't get building insurance it effectively renders the property mortgageless."
Flood preventative measures such as air-brick covers, door blocks and non-return valves on pipes will help protect your home from flooding and also help to reduce premiums – and in some instances persuade an insurer to offer building cover where it had previously been withdrawn.
However, there's no guarantee of this. Shaun Church, spokesperson for independent mortgage adviser Private Finance, explains: "For example, if your property is on the seafront and the flooding is caused by high seas, it would be very difficult to put enough protection in place to make the property an insurable proposition.
"However, if the flooding is caused by a small stream that is then routed away from a property, or its path is blocked entirely, then an insurer may consider the reduced risk acceptable."
Although rare, in the worse-case scenario, if lenders see a home is uninsured, they could call in the mortgage debt, thus basically withdrawing the mortgage deal, leaving homeowners the unenviable task of trying to sell their uninsurable home in order to pay off their mortgage.
Four steps you need to take to protect your home from flooding
1. Check if your house is in a flood-risk area by typing your postcode into the Environment Agency's online flood map at environment-agency.gov.uk. You can also sign up for text, email and fax flood alerts.
2. Invest in flood-barrier products like air-brick covers, non-return valves on drains and water pipes, purpose-built boards or barriers to fit doorways, and sealing floors and walls.
3. The National Flood Forum's Blue Pages directory lists different flood-resilient products, and companies that provide them. For more details contact the NFF on 01299 403 055 or go direct to bluepages.org.uk.
4. If your home is regularly at risk, move plug points and electrical equipment up from the ground so they are about halfway up the wall. Cement floors and use rugs and water-resistant tiles instead of carpets.
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.
This type of insurance covers the structure and fabric of your property – the bricks and mortar, not the contents (for which you need contents or home insurance). If you have a mortgage, the lender will insist you have a suitable buildings insurance policy in place. Many lenders offer their own building insurance policies, but you don’t have to buy it from your own lender but you have the option of shopping around. The insurance covers you for the rebuilding costs, not the market value of the property.
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.