If you live in a house that’s at risk of flooding, you should be able to continue to get affordable insurance for it. That’s because of a new scheme called Flood Re, which means most properties will be able to get insurance.
Q. When does the flood insurance scheme start?
A. The scheme starts on April 4th 2016 and covers the whole of the UK. However, not all properties are covered (see below).
Q. Who won’t be able to get insurance under this new agreement?
A. Properties that cannot get insurance through this Flood Re scheme include new homes built after January 1st 2009, commercial properties (such as shops but not including certain bed and breakfast properties) and leasehold blocks of flats with four or more properties, or with fewer flats but where the freeholder doesn’t live in the block, aren’t included in the flood insurance scheme. However, a leaseholder’s contents could be insured through this scheme.
Properties owned by a company are also not covered by this scheme.
However, bed and breakfast properties that pay council tax (as opposed to business rates) and that are insured under an ordinary home insurance contract are covered, as are second homes and holiday homes, farm houses and cottages (but not outbuildings) and tenants’ contents insurance are covered.
Q. I live in a house that’s been flooded before. Will I be able to get insurance?
A. You should be able to get insurance under the new agreement. It won’t change the way you buy insurance and you won’t have to buy a ‘Flood Re’ policy. What should happen is that, if the insurer thinks your property qualifies, it will ask the flood insurance scheme to take on part of the risk.
The introduction of the flood insurance scheme should mean there is more choice for properties at risk of flooding.
Q. Does this insurance agreement guarantee how much I’ll pay for insurance?
A. No, it doesn’t guarantee how much your overall buildings and contents insurance will cost but it will place a cap on the amount you’ll have to pay for the flood cover element of your buildings and contents insurance.
The amount you pay will be linked to your council tax band. If you’re in band A or B, you’ll pay no more than £210 a year for the flood cover element of your home insurance (property and contents combined) and if you’re in band G you’ll pay no more than £540 a year. If you live in a band H property the flood element will cost no more than £1,200 a year.
SAVVY TIP: The flood cover part of your insurance is only part of the overall bill, so your insurance will be more expensive than this.
Q. How will the insurance flood fund work?
A. Insurers will pay money into the not-for-profit fund (called Flood Re), which aims to pay out for flood claims in what the industry calls 99.5% of years. This means even if there was very bad flooding, the fund should be able to cover the losses. It’s designed to be able to pay out even if the flooding is a ‘one in 200 years’ event, which would be six times worse than the flooding we had in 2007.
SAVVY TIP: All insurers selling home insurance policies will have to pay a levy into this fund, which will work out at £10.50 per household per year on all home insurance policies.
Q. I don’t live in a flood risk area. How will I be affected?
A. You won’t be affected directly. You will pay the levy of £10.50 a year mentioned above, but it won’t be a separate charge as it will be priced into your insurance. You may not even notice any difference in your premium as insurers already cross subsidise some insurance customers.
Q. I own a small shop. Will I be covered by this agreement?
A. No, only residential properties will be covered. However, ‘bed and breakfast’ properties may also be able to be insured. You can find out whether or not your home will be covered by the Flood Re scheme on its website. There’s also some information on the home page of the Flood Re website.
Photo credit: Morguefile/manuere
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