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.