The government’s Flood Re scheme offers a helping hand to homeowners in high-risk flood areas.
Set up in April 2016, Flood Re is a partnership scheme between the government and the insurance industry that aims to make home insurance more affordable for people who live in areas that are prone to flooding.
As climate change has accelerated alongside house-building in flood plains, more and more homes are at risk of flooding – which the government defines as being at a one in 75 chance of flooding in any given year (1.3%). This has rapidly pushed home insurance prices up to unbearable levels, eventually prompting the Flood Re scheme.
The scheme is paid for with a levy on insurers, who collectively pool an annual pot of around £180m, which is then used to help pay for valid flood claims. This in turn allows them to keep home insurance premiums manageable for homeowners in high-risk areas.
In fact, premiums in flood-risk areas are linked to each property’s council tax band, while the scheme caps the excess on such policies to £250 – previously it could run into the thousands of pounds.
For those in the worst-affected areas, the combination of high premiums and steep excesses made insurance effectively unaffordable. Flood Re has gone a long way to putting that right.
In total, the scheme expects to help between around 250,000 and 350,000 properties over the 25 years it plans to operate.
Higher flood-risk, higher premiums
Despite this, the latest MoneySuperMarket data still demonstrates fairly stark differences in home insurance premiums for people living with greater risks of flooding. For instance, between January and June 2018, you’d pay an average of £105 per year if you’d never been affected by flooding before, and £254 if your home had flooded before – a difference of £149.
Likewise, you’d pay £32 more if your home is 400m or less away from water.
However, these costs are still much lower than they were before Flood Re was introduced.
The data also shows that the proportion of people making flood-related claims on their home insurance has steadily grown in the years since Flood Re was established.
Claims made per 1,000 policies sold
Floods reported at policy-holding households per 1,000
According to MoneySuperMarket data collected between 1 January 2015 and 30 April 2019
How to claim on Flood Re
Customers do not actually deal with the Flood Re scheme in general, and are still asked to buy home insurance as normal. So if you have been affected by flooding, you make a claim with your provider as you would in any other situation.
If the cost to the insurer from flood damage rises to a certain level, they make their own application to the scheme in order to recoup their own costs.
What does flood insurance cover?
Flood insurance is generally included in your main home insurance policy, and covers costs that result from flood damage. Home insurance is divided into two types: buildings insurance, which covers the structure of the property, and contents insurance, which protects your belongings.
Flood insurance payouts will cover things like:
- Drying out your home
- Restoring any fittings and fixtures like lights and kitchens
- Removing debris
- Fees for such as legal representation, property surveyors and architects’ fees
- Water damage to your belongings, fixtures and fittings
How to reduce the risk of flooding
While you might not be able to prevent your local river from bursting its banks, there are plenty of practical steps you can take to minimise damage to your property and possessions. These include the following:
- Sign up to the government’s early flood-warning alert service: that way you’re prepared for the worst before it happens
- Set up a plan: even if you live in a flash-flood area, having a prearranged plan could literally be a life-saver. The plan should include contact numbers for friends, family and insurers, and a list of what to do when the warning comes. For instance, you’ll want to switch off your utilities, and move vulnerable valuables, documents, electrical goods and furniture upstairs, or somewhere else above the high-water line
- Install flood protection on your property: there are a lot of flood-defence solutions on the market, and while you may not be able to make your home totally water-tight, you can certainly minimise damage. You should look for a mixture of ‘resistance’ and ‘resilience’ measures – preventing the water from getting in and reducing the damage water can do. You might consider using rugs instead of fitted carpets, raising the height of electrical sockets, replacing wooden kitchen units with stainless steel or plastic, laying ceramic tiles on the ground floor, and fitting non-return valves to your drains so water can’t enter through your outlets. There are professional flood-protection services which will be able to advise you in more detail
Comparing flood insurance quotes
One of the best ways to keep your home insurance premiums down is to shop around when it comes to renewal time and compare insurance policies.
With MoneySuperMarket’s home insurance comparison tool, you simply answer a few questions about yourself, your home and your area – including possible flood risks – and you’ll be able to browse through a list of policies.
If you are in a flood-risk area then you’ll need to make sure your home insurance would cover the cost of any repair work for your home and contents if they’re damaged in a flood. The cheapest policy may not offer the right level of cover for your home, so it’s important to compare.