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 scheme called Flood Re, introduced in 2016.
Q. Can everyone get flood insurance?
A. The flood insurance scheme (called Flood Re) is designed to provide affordable flood cover to properties that are at risk of flooding. Most homes will qualify, but there are some that cannot get insurance this scheme. These are:
- New homes built after January 1st 2009
- Commercial properties (such as shops but not including certain bed and breakfast properties)
- Leasehold blocks of flats with four or more properties, or with fewer flats but where the freeholder doesn’t live in the block. However, a leaseholder’s contents could be insured through this scheme.
- Properties owned by a company.
Bed and breakfast properties that pay council tax (as opposed to business rates) and that are insured under an ordinary home insurance are covered. Second homes and holiday homes are also covered by this scheme, as are farm houses and cottages (but not outbuildings). Tenants’ contents insurance are also 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 this flood insurance 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 has meant there’s been 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. Who pays for it?
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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