New Flood Insurance Plan Leaves Private Rental Sector Properties Unprotected
The ill timed Government announcement over the changes to flood insurance does little to reassure property owners and landlords about flood insurance price rises as huge swathes of the country remain flooded after the winter storms.
The Government has finally reached a deal with the Association of British Insurers (ABI) to replace the ‘Statement of Principles’ agreement of the Water Bill, that was originally due to expire on 31st July 2013, under which insurers offered affordable flood insurance coverage to a majority of households in return for the Government maintaining spending on UK flood defences.
The British Property Federation (BPF) reported that an alliance of property industry leaders and the Council of Mortgage Lenders (CML) had huge concerns about the new plan, called Flood Re.
A number of organisations have already called for urgent amendments to the Water Bill, after it emerged that a significant number of properties that had been expected to be included within Flood Re, would instead be excluded.The BPF are warning that such exclusions in the types of property intended to be covered by the Government’s Flood Re proposals will leave millions of residential and rental properties without any access to affordable flood insurance.
As currently defined, Flood Re will exclude cover on the following property types:
- Leasehold properties;
- Private rental sector properties;
- Small and medium-sized enterprises (SMEs);
- Housing association properties;
- New-build residential properties constructed after January 2009;
- Council houses
- Properties in council tax band H.
With almost 5 million leasehold residential properties in England and Wales, and over 4 million properties in the UK’s private rental sector, this means that many millions of properties are likely to be excluded, rather than the estimate of 9,000 homes being widely-cited by numerous agencies.
According to the ABI, Flood Re should be launched in the summer of 2015 until then insurers will work to the outgoing “Statement of Principals” of the Water Bill.
The new flood insurance deal aims to ensure homeowners and residents living in high flood risk areas of the UK can continue to find affordable flood insurance by placing a cap on the total cost.
Flood Re will be funded by a levy added to all home insurance premiums, expected to be around £10.50 a year – but the exact amount will depend on the council tax band of the property. These extra funds will be used to offset the costs of flood damage and fund the flood insurance cap.
Getting comprehensive buildings insurance will give you financial protection against flooding but you still need to do all you can to limit flood damage.
Signing up for Environment Agency Flood Alerts and flood warnings will give you extra time to prepare your personal flood defences and move your valuables and belongings upstairs out of reach of the flood water if there is a risk.
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