Flood Re Launched at Last

We have reported before on the new scheme which is designed to ensure that many people living in flood risk areas can secure more affordable buildings insurance.

We have reported before on the new scheme which is designed to ensure that many people living in flood risk areas can secure more affordable buildings insurance.  We say 'many people' because the new scheme, called 'Flood Re' has some important exclusions - so not everyone will be able to benefit from the scheme.

A flooded home is devastating. It can cause disruption, damage and stress. Families might have to move out of their homes for months at a time.  A property that has flooded might be more difficult to sell or mortgage in the future. So, extortionate insurance premiums (or, at worst, an inability to obtain insurance at all) on top of these problems is the last thing that any homeowner needs.

The Government and the insurance industry agreed a 'Statement of Principles' which ensured that homeowners in flood risk areas could obtain reasonably priced buildings insurance. However, this agreement expired in 2013 and the Government and the insurers have been negotiating ever since on its replacement.

The Flood Re Scheme came into force on 4 April 2016. It is a £2.1bn flood reinsurance scheme between the Government and the insurance industry to enable people that live in flood prone areas to insure their properties.  The scheme will be funded by a premium of £10 or so being added to all buildings insurance premiums together with a 'top up' which those in flood risk areas will pay.  Crucially the extra top up will range from £210 to a limit of £1200 and is based on council tax bands A to H.

Homeowners need to understand that not all properties in flood risk areas will be included in the scheme. For those properties, insurance to cover flood risk may still be charged at high premiums or not be available at all.  Some of the properties that will not be covered are:

  • blocks of residential flats
  • buy to let properties
  • business properties
  • company houses/flats etc
  • all properties constructed after 2009

Anyone buying a property should have the issue of potential flood risk at the forefront of their mind.   You would be well advised to appoint a reputable property lawyer who can carry out appropriate searches and enquiries for you when you purchase.

To discuss this or any other property related matter, contact us.