Flood-prone homes may become uninsurable
Homeowners in flood-risk areas may soon be unable to afford to insure their homes, the Association of British Insurers (ABI) warns.
The ABI fears that 200,000 UK households will be unable to afford home insurance and will struggle to sell their homes once the current agreement between the government and the insurance industry - the so-called 'Statement of Principles', which ensures flood-prone homes can be insured - ends on 1 July 2013.
The ABI is proposing a Flood Insurance Fund, which would involve a small levy on all home insurance to subsidise the cost of insuring flood-prone homes. But to cover any major floods taking place in the first few years, the scheme would need to be backed by a temporary overdraft facility from the government.
So far no agreement has been reached.
"The government has indicated it will not provide any temporary overdraft facility for the insurance industry's not-for-profit scheme, which makes it very difficult for it to go ahead. As a result, negotiations have hit an impasse," says Nick Starling, director of general insurance at the ABI.
But, Owen Paterson MP, environment secretary, denies that talks have halted, and says the government is committed to securing a good deal for both households and the taxpayer.
How to claim on your insurance
If you've been affected by flooding, here's some top tips on dealing with your insurance.
- Remember, you do not need approval from your insurers for immediate emergency pumping and repair work to protect the property from further damage, but you must keep your receipts.
- Don't throw anything away until you are told you can by your insurer. This excludes ruined food, but make sure you list all perishable goods you have to bin.
- In every room affected, mark the wall with the maximum height the floodwater reached, using a permanent ink pen, and photograph or video all the damage.
- Find out how long it will be until the insurance company's loss adjuster visits after you have made your claim.
- Make sure you keep copies of all correspondence with your insurance company.
- Ask your insurer if it will cover the cost of cleaning your property, and if it will help pay for repairs that will reduce the risk of flood damage in future.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
Insurance claims specialists that investigate contentious claims on behalf of insurance companies or policyholders. They investigate at the scene of an incident and establish the causes of the ‘loss’ (damage or destruction of property) and whether it is covered by the insurance policy. They then write reports for the insurer, assessing the validity of the claim and recommend if the insurer should pay out and, if so, how much.
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.