Homeowners at risk of flooding have been given reassurance today that their insurance policies will continue to cover them for the long-term.
Following extreme flooding over the past few years, insurance companies agreed that they would continue to offer cover to the majority of households at risk. However, the Association of British Insurers (ABI), a trade body, had threatened to withdraw this cover unless the government kept its promise to invest in better flood defences.
During 2007, flooding cost the ABI's members £3bn in claims.
Today the ABI and the government finally reached an agreement that they say will ensure flood insurance remains widely available now and in the long-term.
As part of the deal, the government has agreed to put in place a long-term strategy to prevent flooding and to also consider future changes to policies and funding. It will also be required to improve the planning system to prevent new homes being built on floodplains.
As long as the government keeps up its end of the deal, insurance companies will still offer cover to people at moderate risk of flood as well as existing customers at high risk - providing the risk is reduced to an "acceptable level" within five years.
Phil Woolas, floods minister, says the deal means protection for homeowners in the short and long-term. “The devastation caused by last year’s unprecedented rainfall has shown just how vital it is for people to be able to insure their homes and livelihoods against the risk of flooding,” he adds.
The ABI estimates that as many as 517,000 homes are at significant risk flooding. It has repeatedly criticised the government for failing to do more to protect at risk homeowners.
Stephen Haddrill, director general at the ABI, says: “We are pleased that the government recognises that a long-term investment strategy, adequately funded, is the best way to manage the growing flood threat. It will help ensure that the flood insurance protection, relied upon by millions of householders and businesses, remains widely available.”
The insurance sector’s commitment will not extend to any properties built after 1 January 2009. And the ABI points out that the deal will not reduce insurance premiums or policy terms, which will continue to reflect the risk presented.
Andy Leadbetter, head of home insurance at moneysupermarket.com, says some homeowners in flood-risk areas continue to struggle to find competitive insurance.
"Some insurers will cover homeowners in flood risk areas but it can be hard to find affordable and competitive insurance especially for properties where a claim for flooding has already been made," he adds. "We now look to the providers to step up to the plate and continue to offer affordable home insurance to those in need.
"I urge anyone planning to buy a home on a flood plain to think carefully about the impact location might have on their premiums."