Devastation caused by widespread flooding in the summer of 2007 – which left 13 people dead – cost the UK £3.2bn, according to an official report published in January by the Environment Agency. Little wonder then, the event has been branded as a ‘national catastrophe’.
In November last year some homeowners suffered a double blow when more floods swept throughout parts of England and Wales. The village of Cockermouth in Cumbria was hardest hit, finding itself under more than eight feet of water with 200 emergency rescues and yet another tragic fatality.
Implications on homeowners’ wallet
In its depressing summary, the Environment Agency said that, of the 48,000 homes affected, each cost between £20,000 and £30,000 to repair. But even those ‘luckier’ homeowners living in a floodplain area but not affected directly by the floods will still feel the implications on their wallet.
Back in 2002, the government ruled that UK insurers have an obligation to renew existing home and contents policies even if the property had suffered from flooding since it was taken out. However what it did not stipulate is any cap on premium loading.
This means that homeowners living in high-risk areas of flooding can be facing annual bills running into literally several thousands of pounds. Alternatively, insurers could charge reasonable premiums but throw in mammoth excesses – the amount you need to stump up towards every claim – instead.
While the government move was welcome, at Gocompare.com we are taking steps to improve this situation further by working closely with specialist insurance brokers – such as Home Protect – to provide homeowners with affordable premiums. This also means that homeowners living in high risk postcode areas – but in low risk situations such as on a hill – are able to specify this in their application and be charged premiums more accordingly.
Buying a home in a floodplain
Ironically, many floodplain areas are among the prettiest in the country – something which will always attract new buyers. But if you are considering buying a home in a high risk flooding area, the key of course, is research.
First off, it’s worth looking at the flood map on the Environment Agency’s website as this will provide a clear and unbiased indication of how likely the area is to flood.
By law, details of previous flooding must also spelled out by the vendor in the Seller’s Property Information Form (SPIF). This is one of a series of documents passed from the seller’s solicitor to the buyer’s solicitor. Sellers are legally bound to answer the questions – which include the subject of flooding – honestly and accurately so take particular care in checking this document. You will also find details of flooding in your Local Authority Search available from your solicitor.
But equally crucial is to establish what the ongoing cost of your buildings and contents cover will be before coming anywhere close to exchanging contracts. Thankfully these days, this couldn’t be easier to do through comparison websites such as Gocompare.com. You can even play around with levels of both cover and excess to see if you can find an affordable solution.
Homebuyers should bear in mind however that, while insurers are committed to renewing existing cover, they are not obliged to offer cover to any new customers. Getting affordable cover in place before you buy then is a wise move.
Wider home insurance hikes
But even homeowners who have never witnessed a flood in their lives will be affected by impact of recent high waters in wider premium hikes. According to the AA British Insurance Premium Index published last week, the average cost of buildings cover rose sharply during the past year. It found that, while annual premiums are only 24.3% higher than when the Index was first launched in 1994, most of that gain has happened over the past 18 months.
Simon Douglas, director of AA Insurance, said: “2009 saw a number of extraordinary, although often localised severe weather claims which has included surface water flooding – often in places with no history of flooding – as well as flooding from swollen rivers. This ultimately feeds into premiums.”
At least contents insurance has bucked the trend by falling to below its 1994 value as a result of heavy discounting among insurers, found the report. That said, the third quarter of last year witnessed the first price hikes, which could be the shape of things to come.
Consumer power
But, while there is nothing homeowners can do about rising levels of water – or indeed market rates of home insurance premiums – they are far from powerless. Simply by jumping online and comparing deals using a comparison website can shave hundreds of pounds off your annual premiums. So flood risk or not, this should always be the first place to start.