Live in a flood-risk area? Home insurance should now cost less

The launch of Flood Re is great news if you live in a high-risk flood area.

Home near water that could be flooded

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Flood Re has been set up by the government and the insurance industry to make home insurance more affordable to those living in locations that are prone to flooding.

You can find out more about how Flood Re works here. But in short, the idea is that home insurers will pay Flood Re to look after the flood risk for high-risk properties, reducing the amount they have to charge householders for buildings and contents cover.

In other words, premiums will be a lot lower, with the actual amount linked to the council tax band of the property concerned.

The ‘excess’ on these policies – which used to run into thousands of pounds – will also be capped at £250, meaning this is the amount policyholders would have to chip in if they made a claim.

For those in the worst-affected areas, the combination of high premiums and steep excesses made insurance effectively unaffordable. Flood Re aims to put that right.


Higher premiums

At MoneySuperMarket we’ve analysed home insurance premiums for those living in flood risk areas, and found these homeowners have typically been paying £33 (or 24%) more than the national average for annual contents and buildings insurance.

Those making a claim for damages caused by flooding have typically seen premiums rise by 213% – adding £372 to the cost of cover each year.

According to Kevin Pratt, our consumer affairs expert, householders should be alert to potential savings: “Anyone living in a high-risk flood area who has recently bought home insurance should take a few minutes to run an online quotation to see what prices they would be charged now that Flood Re is in operation.

“If there are substantial savings to be had on their existing premium, it could be worth cancelling the current policy and taking out a new one.

“Policyholders should bear in mind that they will have to pay a cancellation fee, which will be deducted from the returned premiums from the old policy. And if they’ve made a claim on the old policy, no premiums will be returned. But if the saving on the new policy is big enough, it could still be well worthwhile making the change.



“They should just make sure any new policy is in place when the previous one is cancelled, so that cover is continuous.”

Home insurance trends

Another reason for any householder – not just someone in a high flood risk area – to check out home insurance prices is the fact that the long-term trend for home insurance premiums across the UK is downward.

This is great news, but it’s worth remembering that insurance companies reserve their best prices for new customers.

In other words, someone who renews their insurance with the same insurer each year may not be seeing the benefit of competitive pricing in the market as a whole.

This is confirmed by our analysis, which shows that the average price for buildings and contents insurance for someone switching insurer via the site was £121 in winter 2015/16 while the comparable figure from the Association of British Insurers, which shows the overall average premium for all policies, including those who stay with the same insurer, is £316 – a difference of almost £200.

Clearly, there are deep savings available to those who have not switched for a number of years.

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.


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