Homeowners are unlikely to be covered by flood insurance scheme due to loophole

18 February 2014 - Which Way To Pay

    



Home Insurance: Wealthy homeowners won't be helped by flood insurance scheme

The new flood insurance Government-backed scheme to provide insurance for flood-risk properties will not include wealthy homeowners. Wealthy homeowners have been advised that they may not be covered by the new government backed flood insurance scheme for high-risk properties. They will, however, still have to pay a levy for it.

Owners of high risk properties will have to pay premiums to keep insurance affordable

All owners of properties that are deemed high risk will pay premiums of up to £540 to fund the planned Flood Re Scheme, which aims to keep flood insurance affordable by spreading the cost among those which will be more likely to need it. Properties in Band H will not be eligible for the cheaper cover because they are thought to be able to pay for insurance themselves. The proposal that is due to come into force in 2015, will exempt properties built after 2009 to discourage the development of properties on flood plains. Thousands of properties could be effected due to these loopholes.

Home insurance premiums will be raised due to recent flood damage and claims

Deloitte estimates in a new report that the extreme weather which has hit Britain could cost insurers up to £500million. This is similar to the "big freeze" in the winter of 2010. An estimated 1,300 properties were flooded in the run–up to 2014 at an average cost of £30,000 to £40,000 and a further 270 flooded properties were hit in the recent floods last weekend, the auditing firm said. James Rakow, the insurance partner at Deloitte, said: "The floods and storms threaten to dent the profits made by insurers for the year as a whole, potentially forcing many to raise property insurance premiums."

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