Flood insurance not waterproof

Thousands of householders who suffered flood damage to their properties during recent storms have been advised to think carefully about cancelling existing cover if their premiums rise, as they could struggle to find new policies elsewhere.

The caution came as home and business owners in Cumbria and southern Scotland lodged claims with insurers for flood damage to their properties after record rainfall earlier this week.

These policyholders should continue to be offered cover by their existing providers thanks to an agreement between the government and insurance companies – although the cover could come with a higher premium and excess at renewal, depending on the extent of the claim.

However, those who are not happy with their renewal terms have been advised not to cancel their cover. “If a policyholder who has been affected by a flood claim decides to shop around, then insurers are under no obligation to offer new cover,” warned Malcolm Tarling of the Association of British Insurers (ABI).

“The only obligation is to continue offering cover to existing customers who have made claims, providing future flood risk is adequately managed.”

Insurers assess renewal terms on an individual basis, with those who made costly claims likely to face higher premiums. But it is also common for insurers to raise excess levels on future flood-related claims – sometimes by thousands of pounds.

Householders can take steps to reduce premiums by improving flood prevention measures and installing air bricks to ventilate underfloor areas.

Specialist insurers can also provide quotes for those who have been rejected by mainstream providers. But householders should not decline their renewal quote while looking for an alternative.

“The price you are quoted will be higher and, in some cases, considerably higher than paid previously,” said Julie Owens of moneysupermarket.com, the price comparison website. “But, when considering the cover offered is in the tens of thousands, it is better to be safe than sorry and have cover in place should you need to make another claim in the future.”

The ABI estimates up to 5m properties could be at risk of flooding. Under its agreement with the government, individuals moving to a property that has been subjected to flood damage in the past should be offered insurance by the previous provider.

Insurers advised those currently affected by flooding to get in touch with policy providers as soon as possible. The British Insurance Brokers Association (Biba) can put consumers in touch with insurers that cover properties in flood-prone areas.

www.biba.org.uk.