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Associate Article

Effects of floods on home insurance cost

The recent floods that devastated parts of the UK in June and July have cost the home insurance industry an estimated £4 billion. Leading home cover insurers are raising the cost of home insurance by a calculated average of 10%, approximately an extra £30 - £40 per year.

Norwich Union was the first such company to announce this increase, after the flooding in the north of England lead to claims totalling around £175 million. On top of that, the floods that ravaged Gloucestershire and other southern regions will cost the company a further estimated £165million.

This is also bad news for those who live in areas that are prone to flooding; their premiums are already likely to be three times higher than the average and the further increase in premiums is unlikely to be welcomed.

However, insurers are happy to offer advice on the precautions that can be taken to potentially lower these fees. Such precautions include the installation of specialist plumbing valves, which are designed to prevent the overflow of sewage into homes.

Bearing this in mind, it becomes very important to ensure that homes and contents insurance policies are both sufficient and up to date. Although this is an added cost, the effects of leaving these policies unchecked can be devastating. Without these in play, houses owners have to cover the cost of having their homes dried out by specialists themselves. Also the cost of replacing electrical goods, furniture and redecorating can mount up to thousands. There are plenty of policies out there, such as the Asda Home Insurance
building and contents policy that include flood damage cover as standard. Some like the L&G home insurance policy will cover flood damage to your home but not fences, gates or hedges. The most important thing is to check.

A further frustration to those who have been affected by the flooding is the likelihood of a delay in the processing of claims, simply due to the sheer number involved and the accompanying paperwork. In response to this situation, policyholders are being advised to photograph the damage to their homes and goods in the event that there are disputes as to the value of items being claimed for.
They are also being urged, where possible, to save samples of damaged items, such as carpets or curtains – again to reinforce the assessment of the damage done. And there is also the question whether or not to go ahead with redecoration or to live with the aftermath until the claim is processed.

Prudent advice suggests waiting until the claim is processed and a certificate stating the dwelling to be dry has been obtained; the risk of damp ruining any new decoration is all too real and insurers are unlikely to underwrite the costs of a second redecoration.

The situation has also arisen that, in certain parts of the country, people who live on flood plains or areas prone to flooding are now being refused home insurance outright.

There are also plans to develop a further 350,000 new homes on designated flood plains. With the potential for flooding growing, these homes are going to be viewed as high-risk by insurance companies, certainly resulting in extremely high premiums and possibly resulting in some of them being deemed as uninsurable.

The Association of British Insurers has plenty of useful info and advice of claiming for flood damage.

Motley Fool has a good general guide to covering your home and possessions in their home insurance section.





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