Homeowners could be denied insurance

25 September 2008

Thousands of homeowners may find themselves unable to obtain insurance or forced to pay crippling premiums thanks to government plans to build one million new homes on floodplains.

Currently, around 10% of all properties in England are on floodplains, and with more than a million new homes due to be built on floodplains by 2020, the number of people at risk of flooding is set to substantially increase.

But industry experts are concerned that insurers may not be prepared to cover many of the one million new homes. Flooding already costs £3 billion in an average year, and larger numbers of people living on floodplains – plus climatic changes – will only exuberate the situation.

Julian Lowe, chairman of the Flood Risk Working Party, says many homeowners may face difficulties in obtaining insurance, and at best will be forced to pay expensive premiums to cover their property.

“While the number of people at risk of flooding is likely to rise simply due to climatic changes, this will be exacerbated by increasing numbers of people living on floodplains,” he adds. “There will potentially be many new homes in England for which insurers are not prepared to provide cover.”

Despite this concern, research suggests that the majority of existing homes on floodplains or high-risk areas are able to obtain cheap insurance.

And despite the chances of flooding increasing, a major change in direction by the government this summer raises hopes that the risk facing new homes may be reduced.

Back in July, the government announced it would implement a long-term flood strategy by 2013, that will see tighter planning controls and more investment in flood defences.

Malcolm Tarling, a spokesman for the Association of British Insurers, admits there is a real danger that many of new build properties being uninsurable. But he says the government’s plan does offer hope that this risk could be minimised.

“Insurance companies have a responsibility to provide cover to homeowners wherever possible and also to help homeowners reduce their risk of flood,” Tarling adds.

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