04.05.2016

If you are considering purchasing a home within a known flood risk area, you may be worried about the cost of insuring your home against the devastating effects of flooding.

With one in six homes in England now considered a flood-risk, it is a significant concern and something we are urging home buyers to take into account when conducting their property search.

Our recent post ‘Could your new home be at risk of flooding?’ looked at the measures people can take to discover how susceptible a property may be to flooding – and highlighted one of the issues this can cause as possible increased premiums on your home’s buildings and contents insurance.

A new insurance scheme called ‘Flood Re’, which comes into force this month (April 2016), is attempting to address this, however.

The government, in collaboration with the Association of British Insurers (ABI), has developed a not-for-profit flood insurance scheme known as Flood Re.

How does Flood Re work?

From April 2016, Flood Re will collect an annual tax from every home insurer in the UK, creating a central fund expected to be in the region of £180m.

Any UK insurance company can then pass responsibility for the flood risk areas of a policy to Flood Re to manage on their behalf.

Flood damages can be paid out of the central fund by Flood Re, without affecting the remainder of your policy with your insurance company.

This minimises the risk to insurers, enabling them to keep premiums at a reasonable rate for flood risk homes.

Do I need to do anything different when I insure my home?

The great thing about Flood Re is, it should be put in place by your insurance company without you having to do a thing! You can still purchase insurance through a price comparison site, or directly with a broker, and you will never have to contact Flood Re directly. Any claims will be handled through your insurer as before.
Insurance companies don’t have to take advantage of the Flood Re scheme, however, so it may be worth enquiring about this when you are obtaining a quote for your policy.

What properties are covered by the Flood Re scheme?

Over time, it is estimated that Flood Re will benefit more than 350,000 households by giving them access to those more affordable premiums.

There are certain criteria a property must meet to be covered by the Flood Re fund. It is intended for home owners and tenants only, so business premises generally won’t be covered.

The Flood Re website is a comprehensive resource for further reading, with details of all eligibility criteria and a great Q & A section.

Should you have any further enquiries about buying or selling a home within a flood risk area, our knowledgeable conveyancing team can offer advice and support.